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How does investor relations disclosure affect analysts' forecasts?
Author(s) -
Chang Millicent,
Hooi Liyin,
Wee Marvin
Publication year - 2014
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12046
Subject(s) - investor relations , affect (linguistics) , voluntary disclosure , business , accounting , quality (philosophy) , dispersion (optics) , full disclosure , psychology , marketing , computer science , strategic management , philosophy , physics , computer security , communication , epistemology , optics
We study the relationship between investor relations disclosure and analyst forecast properties in Australian firms, a setting dominated by small firms with limited analyst coverage and requiring continuous disclosure of price sensitive information. We find increasing disclosure in the time period investigated is associated with greater accuracy in firms disclosing fewer items. Disclosure was unrelated to forecast dispersion, possibly due to the low analyst following. In periods of uncertainty, the investor relations awards effectively discriminated quality from quantity of disclosure. These findings highlight the importance of active communication with analysts, particularly in firms providing less disclosure and during periods of uncertainty.