Do Corporate Disclosures Constrain Strategic Analyst Behavior?
Review of Financial Studies, forthcoming.
74 Pages Posted: 5 May 2020 Last revised: 15 Nov 2022
Date Written: November 6, 2022
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: Suggested Citation