Regulation Fair Disclosure and Analysts' First-Forecast Horizon

48 Pages Posted: 3 May 2006

See all articles by Surya N. Janakiraman

Surya N. Janakiraman

University of Texas at Dallas - Department of Accounting & Information Management

Suresh Radhakrishnan

JSOM, University of Texas at Dallas

Rafal Szwejkowski

University of Texas at Dallas - Department of Accounting & Information Management

Date Written: March 2006

Abstract

We examine the impact of Regulation Fair Disclosure (RFD) on first-forecast horizon of analysts' earnings forecasts. The first-forecast horizon is computed as the number of calendar days between the issue of the analysts' first earnings forecast for a quarter and the fiscal quarter-end date. We find that the first-forecast horizon has decreased by about 12 days after RFD: a 10 percent decrease. The top 25 percent of the analysts for each firm are classified as leaders based on the average first-forecast horizon over each year. Leaders are our proxy for favored analysts because obtaining private guidance before RFD would help such analysts provide forecasts earlier. We find that the first-forecast horizon of the leaders decreased by about 18 days, while that of the followers decreased by about 8 days, on average after RFD. This shows that the playing field has been made more level, in terms of eliminating the timing advantage that a select few analysts enjoyed prior to RFD. Specifically, the differential timing advantage between leaders and followers has decreased by about 10 days, out of a differential of 100 days prior to RFD.

Keywords: Earnings forecast, timeliness, disclosure, regulation, financial analysts

JEL Classification: G14, G23, G28, G29, M41

Suggested Citation

Janakiraman, Surya N. and Radhakrishnan, Suresh and Szwejkowski, Rafal, Regulation Fair Disclosure and Analysts' First-Forecast Horizon (March 2006). Available at SSRN: https://ssrn.com/abstract=898624 or http://dx.doi.org/10.2139/ssrn.898624

Surya N. Janakiraman

University of Texas at Dallas - Department of Accounting & Information Management ( email )

2601 North Floyd Road
Richardson, TX 75083-0688
United States

Suresh Radhakrishnan

JSOM, University of Texas at Dallas ( email )

Mail Stop SM 41
800 West Campbell Road
Richardson, TX 75080
United States
972-883-4438 (Phone)
972-883-6811 (Fax)

Rafal Szwejkowski (Contact Author)

University of Texas at Dallas - Department of Accounting & Information Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

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