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Does Regulation FD work? Evidence from analysts' reliance on public disclosure

  • Kross, William J.
  • Suk, Inho
Registered author(s):

    We examine how Regulation FD changed analysts' reliance on firms' public disclosure. Regulation FD is associated with a stronger analyst response to earnings announcements, management forecasts and conference calls—that is, analysts respond to these events more quickly, more frequently and with larger forecast revisions after FD. Further, following public disclosure, the decline in analyst forecast dispersion and forecast error accelerates after FD. We find no such changes either for foreign ADR firms or around several confounding events. Overall, Regulation FD levels the playing field between the analysts and individual investors, thereby promoting “fair game” property of the market.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0165410111000929
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    Article provided by Elsevier in its journal Journal of Accounting and Economics.

    Volume (Year): 53 (2012)
    Issue (Month): 1 ()
    Pages: 225-248

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    Handle: RePEc:eee:jaecon:v:53:y:2012:i:1:p:225-248
    Contact details of provider: Web page: http://www.elsevier.com/locate/jae

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    1. Anup Agrawal & Sahiba Chadha & Mark A. Chen, 2006. "Who Is Afraid of Reg FD? The Behavior and Performance of Sell-Side Analysts Following the SEC's Fair Disclosure Rules," The Journal of Business, University of Chicago Press, vol. 79(6), pages 2811-2834, November.
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    6. Frankel, Richard & Kothari, S.P. & Weber, Joseph, 2006. "Determinants of the informativeness of analyst research," Journal of Accounting and Economics, Elsevier, vol. 41(1-2), pages 29-54, April.
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    9. Gintschel, Andreas & Markov, Stanimir, 2004. "The effectiveness of Regulation FD," Journal of Accounting and Economics, Elsevier, vol. 37(3), pages 293-314, September.
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