Earnings guidance stoppage and the value of financial analysts' research

• 成果类型: Article
• 署名作者: Palmon, Dan; Peng, Xuan; Yezegel, Ari
• 署名单位: Rutgers University System; Rutgers University Newark; Rutgers University New Brunswick; Southwestern University of Finance & Economics - China; Bentley University; Rutgers University System; Rutgers University Newark; Rutgers University New Brunswick
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12895
• 发表日期: 2023
• 页码: 2846-2875
• 关键词: STOCK RECOMMENDATIONS; INFORMATION; management; forecasts; disclosure; CONSEQUENCES; cessation; investors; accuracy; benefits

摘要

We examine the relation between voluntary disclosure and the value of analysts' research by studying the change in the informativeness of analysts' research after managers stop providing quarterly guidance to investors. We find that the market reaction to analysts' recommendation revisions increases significantly after guidance stoppage, controlling for confounding factors as well as for firm and time fixed effects. The increase in market reaction is greater for firms with more opaque information environments and for firms that previously provided disaggregated guidance. Further, the effect of guidance stoppage on the informativeness of analysts' research reverses after managers resume guidance. Finally, textual analyses of analysts' reports before and after guidance stoppage reveal that analysts issue longer, more frequent, and more detailed reports that convey more forward-looking information after stoppages. These findings collectively shed light on the relation between the supply of voluntary disclosure and the value that sell-side analysts add to price discovery in capital markets.