The Effectiveness of Regulation Fd
We examine whether Regulation FD has reduced the informativeness of analysts' information outputs. For a sample of financial analysts' earnings forecasts and recommendations released in a two-year window around Regulation 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%. Furthermore, the drop in price impact varies systematically with brokerage house and stock characteristics related to the level of selective disclosure prior to Regulation FD. Based on the time-series and cross-sectional evidence we conclude that Regulation FD has been effective in curtailing selective disclosure.
Capital markets, financial analysts, government policy and regulation
SMU Cox: Accounting (Topic)