Regulation Fair Disclosure (Reg FD) and its Impact on Earnings Forecasts

摘要

During the late 1990s, both Congress and the Securities and Exchange Commission (SEC) sought to encourage more forward-looking disclosures. As a result, in 2000, Regulation Fair Disclosure, better known as Reg FD was created. Extant research documents managers' reluctance to issue voluntary forecasts of earnings due to legal and other considerations. This study finds that when comparing firms that release voluntary earnings forecasts in Pre-Reg FD versus Post-Reg FD environments, more firms are found to issue voluntary earnings forecasts in a Post-Reg FD environment. In addition, forecasts tend to be more accurate than those in a Pre-Reg FD environment, and also tend to have more significant effect on security prices than those in a Pre-Reg FD environment. Overall, it appears that Reg FD has met its goal of increasing transparency, accuracy and numbers of forward-looking financial disclosures to investors.