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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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    1. Itay Goldstein & Shijie Yang & Luo Zuo, 2020. "The Real Effects of Modern Information Technologies: Evidence from the EDGAR Implementation," NBER Working Papers 27529, National Bureau of Economic Research, Inc.

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