Do Corporate Disclosures Constrain Strategic Analyst Behavior?

Review of Financial Studies, forthcoming.

Swedish House of Finance Research Paper No. 20-12

74 Pages Posted: 5 May 2020 Last revised: 15 Nov 2022

See all articles by Yen-Cheng Chang

Yen-Cheng Chang

National Taiwan University - College of Management; National Taiwan University - Center for Research in Econometric Theory and Applications

Alexander Ljungqvist

Centre for Economic Policy Research (CEPR); Swedish House of Finance; European Corporate Governance Institute (ECGI); Research Institute of Industrial Economics (IFN)

Kevin Tseng

National Taiwan University - Department of Finance; National Taiwan University - Center for Research in Econometric Theory and Applications

Multiple version iconThere are 2 versions of this paper

Date Written: November 6, 2022

Abstract

We show that analyst behavior changes in response to a randomly assigned shock that exogenously varies the timeliness and cost of accessing mandatory disclosures in the cross-section of investors: analysts reduce coverage and issue forecasts that are less optimistic, more accurate, less bold, and less informative. Our evidence supports the channel that analysts reduce a strategic component of their behavior: the changes are stronger among analysts with more strategic incentives, such as affiliated or retail-focused analysts. We conclude that mandatory disclosure can substitute for analyst information production, which is constrained by investors’ ability to verify forecasts using corporate filings.

Keywords: Financial Analysts, EDGAR, Mandatory Disclosure, Financial Intermediary

JEL Classification: G18, G29, G38, M41, M48

Suggested Citation

Chang, Yen-Cheng and Ljungqvist, Alexander and Ljungqvist, Alexander and Tseng, Kevin, Do Corporate Disclosures Constrain Strategic Analyst Behavior? (November 6, 2022). Review of Financial Studies, forthcoming., Swedish House of Finance Research Paper No. 20-12, Available at SSRN: https://ssrn.com/abstract=3579466 or http://dx.doi.org/10.2139/ssrn.3579466

Yen-Cheng Chang (Contact Author)

National Taiwan University - College of Management ( email )

Department and Graduate Institute of Finance
College of Management
Taipei 106
Taiwan

National Taiwan University - Center for Research in Econometric Theory and Applications ( email )

1, Sec. 4, Roosevelt Road
Taipei, 106
Taiwan

Alexander Ljungqvist

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Kevin Tseng

National Taiwan University - Department of Finance ( email )

1, Sec. 4, Roosevelt Road
Taipei, 106
Taiwan

National Taiwan University - Center for Research in Econometric Theory and Applications ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
Taiwan

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