ABSTRACT: We examine the relation between the degree of international diversification and management earnings guidance. While more internationally diversified firms create a more complex information environment, providing an incentive to increase public disclosure, they also have higher costs of disclosure, resulting in disincentives to increase public disclosure. Management earnings guidance is measured in multiple ways, including likelihood, frequency, quality (i.e., point versus range versus open-ended versus qualitative forecasts), forecast error, and bias. We find that more internationally diversified firms issued more guidance prior to Reg FD, but they issue less earnings guidance and lower quality guidance post-Reg FD, when managers are required to make voluntary disclosure of information public. Regarding management forecast error, we document that management earnings forecasts of more internationally diversified firms became less accurate and more biased following the implementation of Reg FD. In summary, we provide evidence of a deterioration in management guidance for internationally diversified firms following Reg FD from the perspectives of likelihood, frequency, quality, accuracy, and bias.
