Abstract
Analysts themselves collect information to improve the precision of earnings forecast. However, once Regulation Fair Disclosure （FD） comes into force and information takes on the aspect of public goods, individual analysts are expected to begin free riding on information acquired by other analysts. This paper develops a model in which analysts decide whether or not to collect costly information, and investors predict earnings based on the analysts’ behavior. The findings of this paper include, under Regulation FD, as the number of analysts grows, their motivation to collect information becomes weaker, and they depend only on public information. Further, without Regulation FD, an increase in the number of analysts has a nonnegative effect on investor’s predictive ability. Finally, under Regulation FD, investor’s predictability is at a low level compared to a case without the Regulation.
