Form 8-K Disclosures and Information Environment of Sell-Side Analysts

• In Event: Analysts' Processing of Information

Abstract

In this study, we investigate how Form 8-K filings affect the information environment of sell-side analysts, using cross-sectional variation in the firm’s social connections with the investment community to proxy for selective disclosure. We first provide evidence consistent with highly-connected firms making more selective disclosures to the investment community after Reg FD. Next, we segregate the public and private sources of information for analysts following Barron, Kim, Lim and Stevens (1998). Our regression results using matched-sample analyses show that when analysts cover firms with more social connections to the investment community, both the precision and the proportion of analysts’ private information are higher in the pre-filing period but not in the post-filing period. In comparison, the precision of analysts’ common information is not significantly associated with firms’ social connection.

Authors

• Cristi A Gleason, The University of Iowa

• Zhejia Ling, Iowa State University

• Rong Zhao, University of Calgary