Anup Agrawal (University of Alabama) Sahiba Chadha (Dupont Capital Management, Wilmington, Delaware) Mark A. Chen (University of Maryland)
Abstract
We examine Regulation FD's impact on the accuracy and dispersion of sell-side analysts' earnings forecasts. Using a large sample of quarterly forecasts made over a nearly 10-year period surrounding FD's adoption, we uncover two main sets of findings. First, individual and consensus forecasts become less accurate post-FD, particularly for early forecasts and for smaller companies. Second, forecast dispersion increases post-FD. This effect is stronger for early forecasts and has increased with the passage of time. These results, which are quite robust to alternative empirical methodologies, suggest that there has been a reduction in both selective guidance and forecast quality post-FD.
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Article provided by University of Chicago Press in its journal Journal of Business.
Volume (Year): 79 (2006) Issue (Month): 6 (November) Pages: 2811-2834 Download reference. The following formats are available: HTML
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