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Do Corporate Disclosures Constrain Strategic Analyst Behavior?

Author

Listed:
  • Yen-Cheng Chang
  • Alexander Ljungqvist
  • Kevin Tseng
  • Itay Goldstein

Abstract

We show that analyst behavior changes in response to a randomly assigned shock that exogenously varies the timeliness and cost of accessing mandatory disclosures in the cross-section of investors: analysts reduce coverage and issue less optimistic, more accurate, less bold, and less informative forecasts. Our evidence indicates that analysts reduce a strategic component of their behavior: the changes are stronger among analysts with more strategic incentives like affiliated or retail-focused analysts. We conclude that mandatory disclosure can substitute for analyst information production, which is constrained by investors’ ability to verify forecasts using corporate filings.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Yen-Cheng Chang & Alexander Ljungqvist & Kevin Tseng & Itay Goldstein, 2023. "Do Corporate Disclosures Constrain Strategic Analyst Behavior?," The Review of Financial Studies, Society for Financial Studies, vol. 36(8), pages 3163-3212.
    • Handle: RePEc:oup:rfinst:v:36:y:2023:i:8:p:3163-3212.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhad008
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    More about this item

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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