Earnings Guidance after Regulation Fd

30 Pages Posted: 8 Oct 2008

See all articles by Ronen Feldman

Ronen Feldman

Bar-Ilan University - Department of Computer Science

Ron Lazer

New York University (NYU) - Department of Accounting

Joshua Livnat

New York University; Prudential Financial - Quantitative Management Associates

Multiple version iconThere are 2 versions of this paper

Date Written: April 2003

Abstract

This study investigates market reactions to voluntary earnings guidance provided by managers after the enactment of Regulation FD, which requires companies to disseminate material news to all investors simultaneously. More managers now issue their guidance to the public instead of disclosure to a selective group of analysts, in conformity with Regulation FD. We examine a very large set of earnings guidance disclosures based on identification of these announcements using text mining techniques.Our results indicate that guidance provided with the disclosure of earnings is not associated with significant market reactions, but guidance provided between earnings releases is associated with significant negative reactions. We further show that market reactions are consistent with the trend implied by management even when it is in the form of qualitative disclosure. Finally, we show that market reactions are stronger (more negative, typically) for NASDAQ firms than NYSE or AMEX firms, larger firms, and when the disclosure involves revenues and not earnings.

Suggested Citation

Feldman, Ronen and Lazer, Ron and Livnat, Joshua, Earnings Guidance after Regulation Fd (April 2003). NYU Working Paper No. 2451/27574, Available at SSRN: https://ssrn.com/abstract=1280737

Ronen Feldman

Bar-Ilan University - Department of Computer Science ( email )

Israel

Ron Lazer

New York University (NYU) - Department of Accounting ( email )

40 W. 4th St., 423
Suite 10-180
New York, NY 10012
United States

Joshua Livnat

New York University ( email )

44 West 4th Street, Suite 10-76
Stern School of Business
New York, NY 10012-1118
United States
212-998-0022 (Phone)
212-995-4004 (Fax)

Prudential Financial - Quantitative Management Associates ( email )

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6th Fl.
Newark, NJ 07102
United States

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