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

See all articles by Katsuhiko Okada

Katsuhiko Okada

Kwansei Gakuin University Business School

Hidenori Takahashi

Nagoya University

Date Written: April 30, 2018

Abstract

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

Okada, Katsuhiko and Takahashi, Hidenori, No Whisper No Value? The Effect of Analysts’ Earnings Preview Ban and Stock Market Behavior Surrounding an Earnings Announcement (April 30, 2018). Available at SSRN: https://ssrn.com/abstract=3103494 or http://dx.doi.org/10.2139/ssrn.3103494

Katsuhiko Okada (Contact Author)

Kwansei Gakuin University Business School ( email )

1-1-155, Uegahara, Nishinomiya
Hyogo, 669-1337
Japan
1798546377 (Phone)

HOME PAGE: http://www.kwansei-ac.jp/iba/index.html

Hidenori Takahashi

Nagoya University ( email )

Furo-cho, Chikusa-ku
Nagoya, 464-8601
Japan

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