Contemporary Accounting ResearchVolume 29, Issue 2 p. 621-654 R&D Intensity and the Value of Analysts’ Recommendations* DAN PALMON, DAN PALMON Rutgers UniversitySearch for more papers by this authorARI YEZEGEL, ARI YEZEGEL Bentley UniversitySearch for more papers by this author DAN PALMON, DAN PALMON Rutgers UniversitySearch for more papers by this authorARI YEZEGEL, ARI YEZEGEL Bentley UniversitySearch for more papers by this author First published: 25 June 2011 https://doi.org/10.1111/j.1911-3846.2011.01117.xCitations: 30 † Accepted by Jeffrey Callen. We would like to thank Sudipta Basu (discussant), Jeffrey Callen (associate editor), Alia Crocker, Rani Hoitash, Pyungkyung Kang, Ann Medinets, Bharat Sarath, Ephraim F. Sudit, the anonymous referees of this Journal, and seminar participants at Bentley University, Lehigh University, Penn State at Great Valley, and the University of Delaware for their valuable comments and suggestions. We also benefited from comments of participants at the American Accounting Association 2008 Annual Meeting and American Accounting Association 2009 Northeast Region Meeting. This research was supported in part by a Faculty Research Grant from Rutgers Business School—Newark and New Brunswick. Ari Yezegel acknowledges the generous financial support provided by Bentley University through the FAC grant. All errors are the authors’ responsibility. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume29, Issue2Summer 2012 (June)Pages 621-654 RelatedInformation

We examine the relation between voluntary disclosure and the value of analysts' research by studying the change in the informativeness of analysts' research after managers stop providing quarterly guidance to investors. We find that the market reaction to analysts' recommendation revisions increases significantly after guidance stoppage, controlling for confounding factors as well as for firm and time fixed effects. The increase in market reaction is greater for firms with more opaque information environments and for firms that previously provided disaggregated guidance. Further, the effect of guidance stoppage on the informativeness of analysts' research reverses after managers resume guidance. Finally, textual analyses of analysts' reports before and after guidance stoppage reveal that analysts issue longer, more frequent, and more detailed reports that convey more forward‐looking information after stoppages. These findings collectively shed light on the relation between the supply of voluntary disclosure and the value that sell‐side analysts add to price discovery in capital markets.