Does voluntary disclosure on an internet platform affect analyst forecast accuracy?

ABSTRACT

We explore how voluntary disclosure on an Internet platform affects analyst behaviour. We find that the higher the level of voluntary disclosure on the ‘hudongyi’ platform of China’s Shenzhen Stock Exchange, the greater the error in analyst forecasts. Voluntary disclosure on this platform provides analysts with heuristic clues, and heuristic cognitive biases increase analysts’ forecasting errors. In addition, social media has a partial mediation effect between voluntary disclosure and analyst forecast errors.

KEYWORDS:

• Voluntary disclosure
• internet platform
• analyst forecasts
• social media

JEL CLASSIFICATION:

• G14
• G30
• M40

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ The website of the ‘hudongyi’ platform is: http://irm.cninfo.com.cn/.

² Numerosity heuristic is a kind of cognitive error; when people make decisions based on quantitative information, they rely too much on surface numbers and ignore other important information (Pelham, Sumarta, and Myaskovsky 1994).

Additional information

Funding

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.