Differential effects of regulation FD on short- and long-term analyst forecasts |
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| Authors: | Bin Srinidhi Sidney Leung Bikki Jaggi |
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| Institution: | 1. School of Accounting and Finance, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong;2. Department of Accountancy, College of Business, City University of Hong Kong, Kowloon, Hong Kong;3. Department of Accounting, Business Ethics & Information Systems, Rutgers Business School, Rutgers University, New Brunswick, New Jersey, United States |
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| Abstract: | In this paper, we provide evidence that the quality of short-term analyst forecasts improved but the quality of long-term analyst forecasts deteriorated after the implementation of Regulation Fair Disclosure (FD). More specifically, our results show that the precision of the idiosyncratic information component of short-term forecasts improved in the post-FD period, whereas the precision of both the common and idiosyncratic information components of long-term forecasts declined. We attribute this result to the reduced disclosure of long-term, future-oriented information in the post-FD period. Thus our results support assertions by some analysts that FD has had a chilling effect on information that is relevant to long-term forecasts. |
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| Keywords: | Regulation FD Analyst forecast Idiosyncratic and common information components Long-term and short-term forecasts |
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