The effect of disclosure transparency on intangibles and analysts' stock pricing forecasts

Using brands as a case example, this study investigates sell-side analysts' forecast pricing decisions for internally generated brands, and acquired brands. In this study 26 analysts are asked to forecast stock prices for three firms in four separate experiments. Each experiment has three separate firms: first firm having internally generated brands only, and second firm having acquired brands only, and third firm having internally generated and acquired brands. Each firm produces identical current an future cash flows. The study increases the complexity for stock price forecast form the first to the fourth experiment. Despite the cash flow information the first experiment does not provide additional information, the second experiment provides market-to-book values of the three firms that are dissimilar, the third experiment provides dividend yield values of the three firms that are dissimilar, and the fourth experiment provides both market price-to-book values and dividend yield values of the three firms simultaneously. Analysts forecast stock prices for future three years. Conducting 3x3 within-subjects ANOVA for each experiment, this study finds that the brand type does not significantly influence the stock price forecasts in each experiment. The price forecasts are significantly different among the forecasting years in each experiment.