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Article
Anti-Selective Disclosure Regulation and Analyst Forecast Accuracy and Usefulness
Journal of Corporate Finance
  • Arnold R. Cowan, Iowa State University
  • Valentina Salotti, Iowa State University
Document Type
Article
Publication Version
Accepted Manuscript
Publication Date
10-1-2020
DOI
10.1016/j.jcorpfin.2020.101669
Abstract

We investigate regulations intended to stop managers from privately disclosing corporate information to analysts in a setting with enhanced potential to isolate regulatory effects: the European Union (EU) Market Abuse Directive (MAD), a common regulation implemented by member states with varying sanctions and enforcement resources. Following the implementation of MAD in a country, analyst forecasts become more accurate, with relatively little of the effect attributable to increased voluntary public disclosure by covered firms. The effect of MAD on analyst accuracy is stronger in countries with more stringent enforcement and sanction systems. Although the improvement in accuracy is associated with the implementation of MAD alone, stock prices do not respond more strongly to analyst forecast releases until after market-trading enforcement improves under subsequent EU legislation (MiFID).

Comments

This accepted article is published as Cowan, A.R., Salotti, V., Anti-Selective Disclosure Regulation and Analyst Forecast Accuracy and Usefulness. Journal of Corporate Finance, 64 (2020), doi: 10.1016/j.jcorpfin.2020.101669. Posted with permission.

Copyright Owner
Elsevier B.V.
Language
en
File Format
application/pdf
Citation Information
Arnold R. Cowan and Valentina Salotti. "Anti-Selective Disclosure Regulation and Analyst Forecast Accuracy and Usefulness" Journal of Corporate Finance Vol. 64 (2020) p. 101669
Available at: http://works.bepress.com/arnold_richard_cowan/4/