An Empirical Examination of the Determinants of Industry-Level Earnings Forecast Disclosure Frequency

The industry-level frequency of managements' earnings forecast disclosures is examined. The proposition that management may believe that their firm's disclosures are adequate because investors are sufficiently informed from other industry-members' disclosures is considered. Evidence is presented of industry level factors that influence industry member disclosure choices. First, as more analysts follow industry members, there is an increased frequency in industry disclosures in support of the notion that disclosure frequency increases with the level of information asymmetry. Also, it is found that when the information disclosed represents material facts (indicated by year-to-year earnings exhibiting greater changes), there is again greater disclosure frequency among industry members. Together, these results are consistent with firms updating investor beliefs when investor expectations are less likely to be correct because of the arrival of a large amount of new information.