Mandatory R&D Disclosure and Analyst Forecast Accuracy : Evidence from an Emerging Market

We examine whether mandatory research and development (R&D) investments disclosure matters to analyst forecast accuracy. Using a difference-in-differences research design, we document a significant decrease in forecast errors for firms that previously chose not to disclose R&D investments but made the disclosure after the mandate, relative to firms not affected by the mandate or firms that previously did voluntary disclosure of R&D investments. Meanwhile, the impact of mandatory R&D disclosure on forecast errors intensifies for firms with higher information asymmetry or when analysts are working under unfavorable conditions. Together, these findings indicate that mandatory R&D disclosure provides useful information