Author : Jamie Diaz
Publisher :
ISBN 13 :
Total Pages : 50 pages
Book Rating : 4.:/5 (13 download)
Book Synopsis 10K Complexity and the Market Efficiency and Information Asymmetry Implications of Analysts' Annual Earnings Forecasts by : Jamie Diaz
Download or read book 10K Complexity and the Market Efficiency and Information Asymmetry Implications of Analysts' Annual Earnings Forecasts written by Jamie Diaz and published by . This book was released on 2019 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines whether 10K complexity has unintended consequences in terms of impairing price discovery in capital markets. More specifically, we examine the impact -- on market efficiency and information asymmetry -- of sell-side financial analysts' first revised forecasts following publication of high- versus low-complexity 10Ks. We hypothesize that: (1) analyst underreaction to 10K-related information increases with complexity, (2) the impact of analyst underreaction on stock price efficiency increases with 10K complexity, and (3) the generally mitigating effect of analysts' forecasts on information asymmetry documented in prior literature dissipates with 10K complexity. Our results are consistent with these hypotheses. Together, our results suggest that analyst forecasting behavior in response to complex 10K-related information constrains price discovery by creating market frictions due to market inefficiency and information asymmetry.