Abstract

This paper presents preliminary evidence of the effect of Regulation Fair Disclosure (FD) on the quantity and quality of firm-specific information released to the market by comparing analyst forecast data from pre-FD to post-FD time periods.  By passing the regulation and prohibiting selective disclosure of material information to privileged individuals, the Securities and Exchange Commission (SEC) intended to provide a level playing field to all investors.  However, opponents argue that FD will have a negative impact by decreasing the quantity and quality of information released by firms to the market.  Consistent with this argument, we document a decrease in analyst following and an increase in forecast dispersion following the passage of FD.

The Effect of Regulation Fair Disclosure On Analyst Behavior

University of New Hampshire