The effectiveness of Regulation FD

The effectiveness of Regulation FD We examine whether Regulation Fair Disclosure (Reg FD) has reduced the informativeness of analysts’ information outputs. For a sample of financial analysts’ earnings forecasts and recommendations released in a 2-year window around Reg FD's effective date, we show that in the post-Regulation FD period the absolute price impact of information disseminated by financial analysts is lower by 28%. We also show that the drop in price impact varies systematically with brokerage house and stock characteristics related to the level of selective disclosure prior to Reg FD. Based on the time-series and cross-sectional evidence we conclude that Reg FD has been effective in curtailing selective disclosure. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting and Economics Elsevier

The effectiveness of Regulation FD

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Publisher
Elsevier
Copyright
Copyright © 2004 Elsevier B.V.
ISSN
0165-4101
D.O.I.
10.1016/j.jacceco.2003.12.001
Publisher site
See Article on Publisher Site

Abstract

We examine whether Regulation Fair Disclosure (Reg FD) has reduced the informativeness of analysts’ information outputs. For a sample of financial analysts’ earnings forecasts and recommendations released in a 2-year window around Reg FD's effective date, we show that in the post-Regulation FD period the absolute price impact of information disseminated by financial analysts is lower by 28%. We also show that the drop in price impact varies systematically with brokerage house and stock characteristics related to the level of selective disclosure prior to Reg FD. Based on the time-series and cross-sectional evidence we conclude that Reg FD has been effective in curtailing selective disclosure.

Journal

Journal of Accounting and EconomicsElsevier

Published: Sep 1, 2004

References

  • Risk return and equilibrium
    Fama, E.; MacBeth, J.
  • Why does stock market volatility change over time?
    Schwert, W.

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