Regulation Fd and the Financial Information Environment

We examine whether Regulation FD is associated with changes in the information environment prior to earnings announcements. After implementation of Regulation FD we find (a) lower return volatility around earnings announcements; (b) some improvement in the speed with which pre earnings announcement price converges to its post announcement level; (c) no reliable evidence of change in various aspects of analysts forecast bias, accuracy, and dispersion; and (d) an increase in the quantity of firms' voluntary forward looking disclosures. Overall, we are unable to find a deterioration in the information environment prior to earnings announcements associated with the implementation of Regulation FD