Graduation Year

Spring 2014

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Matthew Magilke

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© 2014 Marisa Orozco


This paper examines the effects of disclosures on information asymmetry by studying bid-ask spreads around independent management forecasts and earnings announcements released with forecasts. The findings suggest the disclosure of independent management forecasts increase information asymmetry in the market rather than resolving it. Regulation FD has reduced the overall level of information asymmetry in the market with respect to both earnings announcements and management forecasts although it has a greater effect on management forecasts, post-forecast spreads. Closer analysis reveals that when “good news” forecasts and separated from “bad news” independent management forecasts, good news management forecasts decrease information asymmetry. Since initial tests demonstrated that management forecasts increase information asymmetry, these findings suggests that the magnitude of the effect of bad news management forecasts is greater than that of good news forecasts.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.