Regulatory fragmentation and management earnings forecasts

PurposeThis study examines the impact of regulatory fragmentation on the issuance and width of management earnings forecasts (MEFs) in US firms, exploring how the presence of multiple regulatory bodies influences corporate disclosure and transparency.Design/methodology/approachUsing data from the Federal Register from 2004 to 2019, the study employs a measure of regulatory fragmentation to analyze its effect on the likelihood and width of MEFs.FindingsThe research finds that heightened regulatory fragmentation is associated with an increased likelihood of firms issuing MEFs and a wider range of forecasted earnings, indicating a strategic use of MEFs to manage regulatory complexity.Originality/valueThe study offers a unique perspective by contrasting with literature that predominantly views regulatory fragmentation negatively, providing detailed insights into its complex effects on corporate communication. It suggests the strategic use of MEFs amid regulatory challenges, enhancing our understanding of how regulatory environments shape corporate communication strategies.