Through an examination of more than 11,000 firms in the United States, Japan, and
various European markets in the 1991–95 period, this article shows an
association between the level of firms' disclosures and analysts' ability to
forecast earnings per share. The findings are consistent with the notion that
analysts forecast earnings with more accuracy and less optimistic bias for firms
in countries that mandate relatively more disclosure than they do for firms in
countries with less stringent mandates. This article also reports the average
forecast errors for firms, by country, in the study.