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The Effects Of Regulation Fair Disclosure On Management Forecasts
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Book Synopsis The Effects of Regulation Fair Disclosure on Management Forecasts by : Carla Carnaghan
Download or read book The Effects of Regulation Fair Disclosure on Management Forecasts written by Carla Carnaghan and published by . This book was released on 2004 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine management forecasts to determine whether Regulation Fair Disclosure has improved the quality and quantity of public disclosures. Management forecasts are voluntary, provide earnings guidance and are highly sought by investors and analysts. We find that the information disclosed by managers has improved in terms of frequency, specificity and verifiable information provided. We also find that Regulation Fair Disclosure has reduced information asymmetry, and information leakage prior to the release of the MEF. We find no evidence of greater returns volatility. Our results suggest that generally Regulation Fair Disclosure has achieved one of its stated goals of providing a more level playing field to all investors.
Book Synopsis Management Forecasts, Regulation FD, Information Asymmetry and the Cost of Debt by : Boyoung Kim
Download or read book Management Forecasts, Regulation FD, Information Asymmetry and the Cost of Debt written by Boyoung Kim and published by . This book was released on 2013 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines firms' strategic management disclosure policy around debt offerings and its consequences on the cost of debt, considering Regulation Fair Disclosure (FD). Contrary to the literature on equity offerings, there is little evidence about whether debt offering firms increase their disclosure to reduce information asymmetry and how creditors evaluate management earnings forecasts. We find that firms issue more management disclosures around debt offerings and that the increase in management forecasts is more pronounced after Regulation FD. The results suggest that Regulation FD affects a firm's disclosure policy before debt offerings. We also find that firms with high information asymmetry release more management disclosures before debt offerings. Finally, our results show that creditors reward the increased public disclosures with a lower cost of debt, especially more for the firms with severe information asymmetry. In total, this paper adds some evidence to the literature in this area on debt offerings, where there is a lack of such evidence.
Book Synopsis Good News Versus Bad News Management Forecasts in the Pre-and Post-regulation Fair Disclosure Periods by : Yue Zhang
Download or read book Good News Versus Bad News Management Forecasts in the Pre-and Post-regulation Fair Disclosure Periods written by Yue Zhang and published by . This book was released on 2009 with total page 122 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study shows that the likelihood of good news management forecasts relative to bad news management forecasts of quarterly earnings increases after the enactment of Regulation Fair Disclosure (Reg FD). This result suggests that Reg FD leads to a significantly greater change in private to public disclosure of good news than of bad news. I also find that compared to the pre-Reg FD period, in the post-Reg FD period, the horizon of good news forecasts is greater than the horizon of bad news forecasts. This result suggests that good news management earnings forecasts are disclosed to the market more quickly than bad news management earnings forecasts. Overall, the study contributes to the literature on the effectiveness of Reg FD and whether managers withhold bad news.
Book Synopsis The Determinants and Consequences of Managerial Earnings Guidance Prior to Regulation Fair Disclosure by : Amy P. Hutton
Download or read book The Determinants and Consequences of Managerial Earnings Guidance Prior to Regulation Fair Disclosure written by Amy P. Hutton and published by . This book was released on 2002 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: Prior to Regulation Fair Disclosure some management spent considerable time and effort guiding analyst earnings estimates; other management did not. In this paper I examine the determinants and consequences of management's decision to work with analysts in the development of their earnings estimates using proprietary survey data from the National Investor Relations Institute. Findings suggest that when earnings are important to valuation but hard to forecast because businesses and financial transactions are complex, management is more likely to provide assistance to analysts presumably to avoid inaccurate analyst forecasts and negative earnings surprises. A comparison of guided and unguided analyst forecasts indicates that guided quarterly earnings forecasts are more accurate but also more frequently pessimistic, consistent with analysts rationally trading offbias for accuracy to retain access to management's earnings guidance. Cross-sample comparisons of analysts' stock recommendations and long-term growth forecasts provide additional support for the hypothesis that analyst objectivity and independence is affected by management's decision to provide earnings guidance. Finally, evidence from stock price reactions to deviations from the consensus forecast (the traditional measure of earnings surprises) indicates that investors distinguish between guided and unguided analyst forecasts when forming their earnings expectations. This study furthers our understanding of what factors affect management's disclosure choices and how managers' disclosure choices influence the objectivity and independence of sell-side analysts.
Book Synopsis The Effects of Regulation Fair Disclosure on Financial Analysts' Forecasts by : Lei Shi
Download or read book The Effects of Regulation Fair Disclosure on Financial Analysts' Forecasts written by Lei Shi and published by . This book was released on 2007 with total page 112 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Regulation Fair Disclosure and the Private Information of Analysts by : Eric Zitzewitz
Download or read book Regulation Fair Disclosure and the Private Information of Analysts written by Eric Zitzewitz and published by . This book was released on 2002 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reports evidence that Regulation Fair Disclosure has had its desired effect of reducing selective disclosure of information about future earnings to individual analysts without reducing the total amount of information disclosed. In particular, it finds that multi-forecast days, which typically follow public announcements or events, now account for over 70 percent of the new information about earnings, up from 35 percent before Reg FD. This result is obtained by applying a new methodology from Zitzewitz (2001a) for measuring the information content of individual forecasts. These results are strongest for the fourth quarter of 2000, when the SEC Chairman who introduced Reg FD was still in office; since the change in administration, some of the initial effects of Reg FD appear to have been reversed.
Book Synopsis Regulation Fair Disclosure and Analysts' First-Forecast Horizon by : Surya N. Janakiraman
Download or read book Regulation Fair Disclosure and Analysts' First-Forecast Horizon written by Surya N. Janakiraman and published by . This book was released on 2006 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the impact of Regulation Fair Disclosure (RFD) on first-forecast horizon of analysts' earnings forecasts. The first-forecast horizon is computed as the number of calendar days between the issue of the analysts' first earnings forecast for a quarter and the fiscal quarter-end date. We find that the first-forecast horizon has decreased by about 12 days after RFD: a 10 percent decrease. The top 25 percent of the analysts for each firm are classified as leaders based on the average first-forecast horizon over each year. Leaders are our proxy for favored analysts because obtaining private guidance before RFD would help such analysts provide forecasts earlier. We find that the first-forecast horizon of the leaders decreased by about 18 days, while that of the followers decreased by about 8 days, on average after RFD. This shows that the playing field has been made more level, in terms of eliminating the timing advantage that a select few analysts enjoyed prior to RFD. Specifically, the differential timing advantage between leaders and followers has decreased by about 10 days, out of a differential of 100 days prior to RFD.
Book Synopsis Analyst Reactions to Expectations Management in the Post-Regulation Fair Disclosure Period by : Sherry F. Li
Download or read book Analyst Reactions to Expectations Management in the Post-Regulation Fair Disclosure Period written by Sherry F. Li and published by . This book was released on 2014 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a uniquely hand-collected dataset, we examine how financial analysts react to expectations management in the post-Regulation Fair Disclosure (FD) period. We find evidence that management issues pessimistic public guidance to lower analysts' expectations to a beatable level in the new regulatory environment. Majority of the analysts revised their forecasts downward immediately (in terms of days rather than weeks) after the issuance of a pessimistic public guidance. The magnitude of the downward revision is significantly greater for firms that beat the expectations through managerial guidance than firms that beat the expectations without guidance. In addition, firms that beat analysts' expectations through pessimistic guidance are able to achieve a larger positive earnings surprise at the earnings announcement than the “legitimate beaters”
Book Synopsis Re-examining the Effects of Regulation Fair Disclosure Using Foreign Listed Firms to Control for Concurrent Shocks by : Jennifer Francis
Download or read book Re-examining the Effects of Regulation Fair Disclosure Using Foreign Listed Firms to Control for Concurrent Shocks written by Jennifer Francis and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We re-examine the effects of regulation fair disclosure (Reg FD) using ADRs (who are exempt from Reg FD) to control for confounding events which affected all traded firms. Tests based on public information metrics (returns volatility, informational efficiency and trading volume) and on analyst information metrics (forecast dispersion and accuracy) suggest that Reg FD did not uniquely affect the US information environment. However, analyst report informativeness declined for US firms relative to ADR firms, providing evidence consistent with Reg FD achieving one of its objectives - reducing private information flows to analysts.
Book Synopsis Discussion - Regulation Fair Disclosure and Analysts' First-Forecast Horizon by : Lawrence D. Brown
Download or read book Discussion - Regulation Fair Disclosure and Analysts' First-Forecast Horizon written by Lawrence D. Brown and published by . This book was released on 2014 with total page 5 pages. Available in PDF, EPUB and Kindle. Book excerpt: Surya Janakiraman, Suresh Radhakrishnan, and Rafal Szwejkowski (2007), hereafter JRS, examine the impact of regulation fair disclosure (RFD) on the number of days between analysts' first earnings forecasts for the quarter and the fiscal quarter-end (first-forecast horizon). JRS conclude that the first-forecast horizon decreased by twelve days post-RFD; it decreased for both analysts whose average annual first-forecast horizon put them in the top 25 percent for each firm (designated by JRS as leaders) and the bottom 25 percent for each firm (designated by JRS as followers); and it decreased about the same amount for both leaders and followers. JRS interpret their results as follows. RFD reduced the first-forecast horizon on average overall; it reduced the first-forecast horizon for both leaders and followers; and it did not eliminate the timing advantage of leaders versus followers. My discussion proceeds along the following lines. First, I examine whether RFD reduced the first-forecast horizon. Second, I examine whether RFD decreased the first-forecast horizon for both leaders and followers. Third, I examine whether RFD decreased the first-forecast horizon for leaders versus followers.
Book Synopsis The Effect of Regulation Fair Disclosure on the Relevance of Conference Calls to Financial Analysts by : Afshad J. Irani
Download or read book The Effect of Regulation Fair Disclosure on the Relevance of Conference Calls to Financial Analysts written by Afshad J. Irani and published by . This book was released on 2003 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the effect of Regulation Fair Disclosure (FD) on the relevance of company-sponsored conference calls. Measuring relevance by a conference call's ability to improve analyst forecast accuracy and consensus, I find larger improvements in both variables during the period surrounding conference calls in the post-FD era versus the pre-FD era. These findings imply that in the post-FD era relatively more about a firm's upcoming earnings becomes known during conference calls, consistent with FD's success in eliminating selective disclosure.
Book Synopsis Financial Analysts' Forecasts and Stock Recommendations by : Sundaresh Ramnath
Download or read book Financial Analysts' Forecasts and Stock Recommendations written by Sundaresh Ramnath and published by Now Publishers Inc. This book was released on 2008 with total page 125 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial Analysts' Forecasts and Stock Recommendations reviews research related to the role of financial analysts in the allocation of resources in capital markets. The authors provide an organized look at the literature, with particular attention to important questions that remain open for further research. They focus research related to analysts' decision processes and the usefulness of their forecasts and stock recommendations. Some of the major surveys were published in the early 1990's and since then no less than 250 papers related to financial analysts have appeared in the nine major research journals that we used to launch our review of the literature. The research has evolved from descriptions of the statistical properties of analysts' forecasts to investigations of the incentives and decision processes that give rise to those properties. However, in spite of this broader focus, much of analysts' decision processes and the market's mechanism of drawing a useful consensus from the combination of individual analysts' decisions remain hidden in a black box. What do we know about the relevant valuation metrics and the mechanism by which analysts and investors translate forecasts into present equity values? What do we know about the heuristics relied upon by analysts and the market and the appropriateness of their use? Financial Analysts' Forecasts and Stock Recommendations examines these and other questions and concludes by highlighting area for future research.
Book Synopsis The Effect of Issuing Biased Earnings Forecasts on Analysts' Access to Management and Survival by : Bin Ke
Download or read book The Effect of Issuing Biased Earnings Forecasts on Analysts' Access to Management and Survival written by Bin Ke and published by . This book was released on 2006 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study offers evidence on the earnings forecast bias analysts use to please firm management and the associated benefits they obtain from issuing such biased forecasts in the years prior to Regulation Fair Disclosure. Analysts who issue initial optimistic earnings forecasts followed by pessimistic earnings forecasts before the earnings announcement produce more accurate earnings forecasts and are less likely to be fired by their employers. The effect of such biased earnings forecasts on forecast accuracy and firing is stronger for analysts who follow firms with heavy insider selling and hard-to-predict earnings. The above results hold regardless of whether a brokerage firm has investment banking business or not. These results are consistent with the hypothesis that analysts use biased earnings forecasts to curry favor with firm management in order to obtain better access to management's private information.
Book Synopsis Regulation Fair Disclosure and Earnings Information by : Warren Bailey
Download or read book Regulation Fair Disclosure and Earnings Information written by Warren Bailey and published by . This book was released on 2014 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: With the adoption of Regulation Fair Disclosure (Reg FD), market behavior around earnings releases displays no significant change in return volatility (after controlling for decimalization of stock trading) but significant increases in trading volume due to difference in opinion. Analyst forecast dispersion increases, and increases in other measures of disagreement and difference of opinion suggest greater difficulty in forming forecasts beyond the current quarter. Corporations increase the quantity of voluntary disclosures, but only for current quarter earnings. Thus, Reg FD seems to increase the quantity of information available to the public while demanding more effort and struggle from investment professionals.
Book Synopsis The Impact of Regulation Fair Disclosure on Investors' Prior Information Quality - Evidence from an Analysis of Changes in Trading Volume and Stock Price Reactions to Earnings Announcements by : Anwer S. Ahmed
Download or read book The Impact of Regulation Fair Disclosure on Investors' Prior Information Quality - Evidence from an Analysis of Changes in Trading Volume and Stock Price Reactions to Earnings Announcements written by Anwer S. Ahmed and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We document that Regulation Fair Disclosure has reduced differences in information quality between investors prior to quarterly earnings announcements consistent with the intent of the regulation. This reduction is driven by small firms and high technology firms, rather than the large firms targeted by the SEC, which suggests that selective disclosure among large firms may have been much more limited than what was presumed by proponents of FD. In addition, we document that FD has decreased the average information quality of investors in small and high technology firms in the period prior to an earnings announcement while having no lasting effect on other firms. Taken together these two results suggest that, for small and high technology firms, FD succeeded in eliminating selective disclosure but also lowered the average quality of information available about these firms.
Book Synopsis The Effects of Disclosure and Analyst Regulations on the Relevance of Analyst Characteristics for Explaining Analyst Forecast Accuracy by : Sami Keskek
Download or read book The Effects of Disclosure and Analyst Regulations on the Relevance of Analyst Characteristics for Explaining Analyst Forecast Accuracy written by Sami Keskek and published by . This book was released on 2017 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: We posit and find an effect of disclosure and analyst reporting regulations implemented from 2000 through 2003 (including Regulation Fair Disclosure, the Sarbanes-Oxley Act, and the Global Settlement Act) on the importance of analyst and forecast characteristics for analyst forecast accuracy. Following the enactment of these regulations, more experienced analysts and All-Star analysts do not maintain their superior forecast accuracy, and analysts employed by large brokerage houses perform worse than other analysts. In addition, we find a decrease in the importance of analyst effort, the number of industries and firms followed, days elapsed since the last forecast, and forecast horizon. While the importance of bold upward forecast revisions does not change, bold downward revisions lose their relevance for forecast accuracy after 2003. Finally, we find an increase in the important of prior forecast accuracy. We find that the importance of these characteristics varies with the precision of publicly available information. Specifically, the decrease in the importance of most analyst and forecast characteristics and the increase in the importance of prior forecast accuracy are greater when the precision of publicly available information is low. Overall, our results suggest that the positive effects of experience, effort, brokerage house size, and All-Star status on forecast accuracy in the pre-regulation period were because of the information advantages that these analysts enjoyed (rather than their ability to generate private information). In contrast, our results suggest that prior forecast accuracy is related to analysts' ability to generate private information.
Book Synopsis International Diversification and Forecast Optimism by : Ole-Kristian Hope
Download or read book International Diversification and Forecast Optimism written by Ole-Kristian Hope and published by . This book was released on 2011 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research shows that analysts following companies with a higher portion of foreign operations provide more optimistic forecasts, presumably in order to maintain favorable relations with management and thereby obtain improved access to information. We examine the effect of the introduction of Regulation Fair Disclosure (Reg FD) on analyst forecast bias for internationally diversified firms. We hypothesize that analysts' incentives to issue optimistic forecasts for such firms should be reduced in the post-Reg FD era, because Reg FD prohibits firms from selectively disclosing management information to analysts. First, we demonstrate that average forecast bias decreases for our full sample of multinational firms. Second, we show that the positive relation between forecast optimism and international diversification significantly declines (and even disappears) in the post-Reg FD period. Reg FD appears to have been successful in reducing analysts' optimistic bias and in reducing the effect of forecasting complexity on forecast bias for our sample of multinational firms.