MARKET REACTIONS TO ANALYSTSâ FORECASTS AND MANDATORY DISCLOSURES

Abstract

This dissertation investigates the effects of changes in the accounting environment on the capital markets. Included are three manuscripts, each of which, make an important contribution to the accounting literature. The first two manuscripts investigate the impact and importance of analystsâ forecasts. The third manuscript documents the impact of eliminating an important accounting disclosure. This dissertation makes the following contributions to the accounting literature. The first manuscript documents that investor skepticism towards meet/beat firms appears to have been a temporary phenomenon and investors have resumed rewarding firms that meet/beat analystsâ earnings expectations. Further, the study provides evidence that changes in the analyst forecasting environment also contributed to this temporary decline implying that the scandals did not have as strong of an effect on investorsâ confidence in earnings as previously believed. The second manuscript contributes to the accounting literature by documenting the importance of meeting/beating cash flow forecasts to participants in the debt markets. Finally, the third manuscript contributes to the existing literature regarding the value relevance of the IFRS â U.S.GAAP reconciliation by documenting a significant decrease in publicly available information to equity investors at the first reporting period following the SECâ s decision to eliminate the reconciliation. All of these manuscripts extend what is currently known about the importance of public disclosures to capital market participants.