The Effectiveness of Regulation FD

Gintschel, Andreas; Markov, Stanimir

doi:10.2139/ssrn.319423

Cited by 97 publications

(95 citation statements)

References 38 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Our results on the impact of Reg FD are also consistent with several recent papers that examine the impact of the regulation on the behavior of equity analysts and conclude that the law has in fact been effective in curtailing selective disclosure to analysts (see, for example, Mohanram and Sunder (2006), Agrawal et al (2006), and Gintschel and Markov (2004)). For example, Mohanram and Sunder (2006) find that analysts who may have had preferential links with the firms they covered, such as analysts from large brokerage houses, tended to have greater forecast accuracy pre‐Reg FD, but were unable to maintain their forecasting superiority post‐Reg FD.…”

Section: Mechanismsupporting

confidence: 90%

“…Effective October 23, 2000, companies must reveal any material information to all investors and analysts simultaneously in the case of intentional disclosures, or within 24 hours in the case of unintentional disclosures. According to SEC Proposed Rule S7–31‐99, regulators believe that selective disclosure is “not in the best interests of investors or the securities markets generally.” Several recent papers examining the impact of Reg FD on the behavior of equity analysts conclude that the law has in fact been effective in curtailing selective disclosure to analysts (see, for example, Mohanram and Sunder (2006), Agrawal, Chadha, and Chen (2006), and Gintschel and Markov (2004)). Since our tests explore a specific possible channel of selective disclosure, they are relevant to this debate 9…”

Section: The Settingmentioning

confidence: 99%

See 1 more Smart Citation

Sell‐Side School Ties

Cohen¹,

Frazzini²,

Malloy

2010

The Journal of Finance

667

107

View full text Add to dashboard Cite

We study the impact of social networks on agents' ability to gather superior information about firms. Exploiting novel data on the educational background of sell-side analysts and senior corporate officers, we find that analysts outperform by up to 6.60% per year on their stock recommendations when they have an educational link to the company. Pre-Reg FD, this school-tie return premium is 9.36% per year, while post-Reg FD it is nearly zero. In contrast, in an environment that did not change selective disclosure regulation (the U.K.), the school-tie premium is large and significant over the entire sample period. Copyright (c) 2010 the American Finance Association.

show abstract

Section: Mechanismsupporting

confidence: 90%

Section: The Settingmentioning

confidence: 99%

Sell‐Side School Ties

Cohen¹,

Frazzini²,

Malloy

2010

The Journal of Finance

667

107

View full text Add to dashboard Cite

show abstract

“…Straser (2002) reports a decline in the proportion of informed traders but an increase in proxies for information asymmetry and private information. Topaloglu (2002) finds that institutions trade higher amounts during the event period, rather than pre‐announcement, after the imposition of Reg FD, while Gintschel and Markov (2002) find a reduced impact of analyst forecasts, particularly from “high reputation” brokerages. These papers indicate that Reg FD induces substantial changes in the information environment, as is also suggested by our results on disagreement.…”

mentioning

confidence: 99%

Regulation Fair Disclosure and Earnings Information: Market, Analyst, and Corporate Responses

Bailey¹,

Li²,

Mao³

et al. 2003

The Journal of Finance

414

100

View full text Add to dashboard Cite

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 imposing greater demands on investment professionals.

show abstract

“…Their results suggested that the market reaction to affiliated analysts' recommendation changes decreased significantly after the passage of Regulation FD. Francis et al (2006) provided supporting evidence to Gintschel and Markov's (2004) results using American Depositary Receipt (ADR) firms to control for confounding events.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 68%

Analysts’ Recommendation Revisions and Subsequent Earnings Surprises

Palmon

Yezegel

2011

Journal of Accounting, Auditing & Finance

View full text Add to dashboard Cite

This study examines the extent to which analyst recommendations were useful in identifying earnings surprises during the pre-and post-Regulation Fair Disclosure (FD) periods. A comparative analysis of the association between recommendation revisions and subsequent earnings surprises suggests a significant decline in the predictive value of analysts' recommendations after Regulation FD took effect. Recommendation revisions are roughly 55% less useful in predicting earnings surprises in the post-Regulation FD period. Furthermore, the average abnormal return earned by investors following analysts' advice to exploit earnings surprises is approximately 70% lower in the post-Regulation FD period. Overall, this article's findings are consistent with Regulation FD having considerably reduced analysts' comparative advantage in identifying earnings surprises. KeywordRegulation FD, analyst recommendations, earnings surprises, portfolio analysis 1 Rutgers

show abstract

The Effectiveness of Regulation FD

Cited by 97 publications

References 38 publications

Sell‐Side School Ties

Sell‐Side School Ties

Regulation Fair Disclosure and Earnings Information: Market, Analyst, and Corporate Responses

Analysts’ Recommendation Revisions and Subsequent Earnings Surprises

Contact Info

Product

Resources

About