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The effects of information transparency on analysts& forecasts: evidence from the information disclosure and transparency ratings system in Taiwan

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  • Hsihui Chang
  • Ruey-Dang Chang
  • Chun-Ju Fang

Abstract

In an attempt to reduce the information asymmetry between corporate insiders and outsiders, the Taiwan Stock Exchange Corporation (TSEC) and the Gre Tai Securities Market (GTSM) requested the Securities and Futures Institute to implement an information disclosure and transparency ratings system (IDTRS) for all publicly traded companies listed on the TSEC and the GTSM. This study investigates the effects of the IDTRS on the properties of analysts' forecasts. The results indicate that analysts' earnings forecasts are more accurate and the earnings forecast dispersion among analysts decreases after the implementation of the IDTRS. Additionally, the results estimated from the post IDTRS period show that the analysts' earnings forecast errors and dispersion of the "more transparent" companies are smaller than those of the "less transparent" companies.

Suggested Citation

  • Hsihui Chang & Ruey-Dang Chang & Chun-Ju Fang, 2013. "The effects of information transparency on analysts& forecasts: evidence from the information disclosure and transparency ratings system in Taiwan," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 20(4), pages 405-428, December.
    • Handle: RePEc:taf:raaexx:v:20:y:2013:i:4:p:405-428
    DOI: 10.1080/16081625.2012.747237
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    References listed on IDEAS

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    1. Philip Beaulieu & Shujun Ding & Baozhi Qu, 2012. "Compensation disclosure in China," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 19(3), pages 253-277.
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