We examine the effect of private firm information dissemination on analysts’ forecast accuracy for public firms, utilizing the mandatory adoption of electronic business registers in EU countries as a (plausibly) exogenous shock. Our findings reveal a significant improvement in analysts’ earnings forecast accuracy following the registers’ implementation that enhanced private firms’ information dissemination, indicating positive information spillovers to public firms. This effect strengthens (i) when private firm disclosures are timelier within the context of the focal public firm’s fiscal year and (ii) when the focal public firm has private firm suppliers, customers, or competitors. However, increased transparency of private firms also reduces analysts’ incentives to cover public firms, as investor attention shifts from public to private firms. This countervailing force negatively impacts analyst forecast accuracy, partially offsetting the positive effects from information spillovers.

Research suggests that board members value financial reporting quality because executive dismissal often follows low reporting quality events. However, inferences about the board’s demand for reporting quality in these studies are confounded by board members’ reputation incentives because the events examined are public (e.g., restatements). We investigate boards’ demand for reporting quality by exploiting a private signal of misreporting: audit adjustments communicated to the Board by the external auditor. We first survey 29 audit committee chairs to understand whether boards use audit adjustments in their oversight of management and then conduct an empirical investigation to answer our research question. We find an increased likelihood of CFO dismissal following audit adjustments. This association is driven by adjustments that reduce income and by firms with better board oversight. These findings suggest that boards proactively use nonpublic signals of reporting quality and incorporate information from auditors into their monitoring function.