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Abstract

We examine the impact of Regulation Fair Disclosure (RFD) on the horizon of analysts' first earnings forecasts, that is, the first-forecast horizon. The first-forecast horizon is computed as the number of calendar days between the analysts' first earnings forecast for a quarter and the fiscal quarter-end date. We find that the first-forecast horizon has decreased by twelve days after RFD: a 6 percent decrease, on average. Analysts with average annual first-forecast horizon in the top 25 percent for each firm are classified as leaders. Leaders are our proxy for favored analysts who received guidance before RFD. The first-forecast horizon of both the leaders and the followers decreased after RFD. Examining whether the difference between the first-forecast horizon of leaders and followers decreased after RFD provides mixed evidence. This suggests that RFD may not have eliminated the timing advantage that few analysts enjoyed before RFD.

Keywords

forecast horizon timeliness financial analysts leader-follower regulation

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Regulation Fair Disclosure and Analysts' First-Forecast Horizon

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