We examine whether analyst forecast properties deter inefficient labor investment decisions. Using accuracy and dispersion as analyst forecast properties, we find that more accurate and less dispersed forecasts are associated with less inefficient corporate labor investments. We Utilizing Regulation Fair Disclosure (Reg FD) as an exogenous variation to analyst forecasts' activities we find a causal relationship between analyst forecast properties and labor investment inefficiency. We also find that more accurate and less dispersed forecasts decrease labor cost stickiness. Our results are consistent with the view that analyst forecast properties enhance the information environment, which, in turn, improves corporate labor investment decisions.
- Analysts properties,
- Reg FD,
- Labor cost stickiness,
- Labor investment
Available at: http://works.bepress.com/mohammed-sualihu/1/