Do analysts’' forecast properties deter suboptimal labor investment decisions? Evidence from Regulation Fair Disclosure

Mohammed Aminu Sualihu, Alfred Yawson and Iliyas Yusoff

Journal of Corporate Finance, 2021, vol. 69, issue C

Abstract: We examine whether analysts' forecast properties deter inefficient labor investment decisions. Using accuracy and dispersion as analysts' forecast properties, we find that more accurate and less dispersed forecasts are associated with less inefficient corporate labor investments. Utilizing Regulation Fair Disclosure (Reg FD) as an exogenous variation to analysts' forecast activities, we find a causal relationship between analysts' forecast properties and labor investment inefficiency. We also find that more accurate and less dispersed forecasts decrease labor cost stickiness. Our results are consistent with the view that analysts' forecast properties enhance the information environment, which, in turn, improves corporate labor investment decisions.

Keywords: Analysts properties; Reg FD; Labor cost stickiness; Labor investment (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0929119921001164
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:69:y:2021:i:c:s0929119921001164

DOI: 10.1016/j.jcorpfin.2021.101995

Access Statistics for this article

Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter

More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().