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JOURNAL OF ACCOUNTING AND FINANCE
How Has Regulation FD Affected the Performance of Financial Analysts?
Author(s): Cheng-Huei Chiao, Konrad Gunderson, Derann Hsu
Citation: Cheng-Huei Chiao, Konrad Gunderson, Derann Hsu, (2012) "How Has Regulation FD Affected the Performance of Financial Analysts?," Vol. 12, Iss. 1, pp. 60 - 72
Article Type: Research paper
Publisher: North American Business Press
Abstract:
We examine persistence of analyst forecast accuracy before and after the passage of Regulation FD.
Individual analysts are ranked based on their forecast accuracy and we track their ranking over time.
Before Regulation FD we find that analysts exhibit a degree of persistence in that top ranked analysts
tend to maintain their ranking while bottom ranked analysts also tend to remain below average. We find
that after the passage of Regulation FD these effects are accentuated with top analysts consistently
achieving an even higher average rank than before the act. We hypothesize that these effects are due to
Regulation FD’s removal of management as a source of information. Our results suggest that once
analysts are left to their own, they become more distinctive persistent in their performance.
