The Taiwanese Security Exchange Committee requires that
companies listed on the Taiwan Stock Exchange and the Over-the-
Counter Market disclose financial forecasts when certain condi-
tions are met. This unique regulation demands many earnings
com- ponents be disclosed. Aiming at this specific regulation,
I examine the intra-industry information transfer effect of the
earnings'' components forecast and the influence of some
variables (the accuracy of forecasts and non-operating incomes
and expen- ses) on the information transfer effect. The
empirical evidences may provide some guidance for the
government to revise the regul- ation of this financial
forecast rule. The explanatory variables are the sales growth
rate (includ- ing change in industry market size and change in
industry market share), changes in gross profit ratio, changes
in operation ex- penses ratio. The model also controls for the
industry effect. The sampling period are the years from 1992 to
1994. Major find- ings are summarized below: 1. There is a
significant link between mondisclosers'' unexpected price
reactions and disclosers'' unexpected earnings compo- nents. 2.
Earnings components forecasts provide finer accounting infor-
mation than aggregate earnings forecasts do, so they are more
relevant to investors'' decisions. 3. The accuracy of
disclosers'' forecasts have positive influence on the magnitude
of information transfer. 4. Disclosers'' non-operating incomes
and expenses can transfer information about nondisclosers in
the same industry. The mag- nitude of the transfer effects are
different among industries.