Public Debt Issuance Impact on Management Forecasting Frequency: Evidence from Regulation Fair Disclosure

Abstract

AbstractWe examine firms' strategic management disclosure policies on debt offerings and their consequences on the cost of debt, considering Regulation Fair Disclosure (FD). We find that firms issue more management disclosures before debt offerings and witness pronounced increases in management forecasting after Regulation FD, suggesting that Regulation FD affects their disclosure policy before debt offerings. Furthermore, firms with high information asymmetry release more management disclosures before debt offerings, and creditors reward increased public disclosures with a lower cost of debt. We believe that this study contributes to the literature on debt offerings and the impact of Regulation FD.