No Whisper No Value? The Effect of Analysts’ Earnings Preview Ban and Stock Market Behavior Surrounding an Earnings Announcement
36 Pages Posted: 17 Jan 2018 Last revised: 7 May 2018
Date Written: April 30, 2018
On September 20, 2016, the Japan Securities Dealers Association implemented guidelines that prohibited securities sell-side analysts to obtain an earnings preview before the earnings’ official release. We examine the unique impact of the guidelines on market behavior and analyst forecasts in the pre- and post-guideline periods. The results show that after the guidelines, stock return volatility around earnings releases increased, suggesting that the regulation improved the information flow. We also find that the guidelines did not impact the accuracy of analysts’ earnings forecasts. We provide evidence that no decrease in forecast accuracy is because analysts banned by the regulation rely on alternative information sources; that is forecasts of analyst exempt from the regulation.
Keywords: Earnings Preview; Fair Disclosure; Stock Market Behavior; Analyst Forecast
JEL Classification: G14; G18; G11
Suggested Citation: Suggested Citation