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| Author | : Ron Kasznik |
| Publisher | : |
| Total Pages | : 32 |
| Release | : 1999 |
| Genre | : |
| ISBN | : |
This paper investigates w ...
| Author | : Yongtae Kim |
| Publisher | : |
| Total Pages | : 45 |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
This study examines the stock-price reactions to analyst forecast revisions around earnings announcements to test whether pre-announcement forecasts reflect analysts' private information or piggybacking on confounding events and news. We find that management earnings forecasts influence the timing and precision of analyst forecasts. More importantly, evidence suggests that prior studies' finding of weaker (stronger) stock-price responses to forecast revisions in the period immediately after (before) the prior-quarter earnings announcement disappears once management earnings forecasts are controlled for. To the extent that management earnings forecasts are public disclosures, our results suggest that the importance of analysts' information discovery role documented in prior studies is likely to be overstated.
| Author | : Kanyuan Huang |
| Publisher | : |
| Total Pages | : 60 |
| Release | : 2022 |
| Genre | : |
| ISBN | : |
This paper examines the information contained in analyst forecast revisions following earnings announcements. I find that sorting firms on aggregated forecast revisions generates a much stronger post-earnings-announcement drift than sorting on measures of earnings surprises. The strong association between aggregated forecast revisions and post-earnings-announcement returns is driven by the subsample of firms with large-magnitude earnings surprises. This result is consistent with analysts' roles in interpreting corporate earnings. Further, the mispricing is the strongest when forecast revisions contradict earnings surprises, suggesting investors have difficulties in processing contradictory signals. Lastly, I document aggregated forecast revisions are more informative when the information environment around earnings announcements is more opaque, when firms have high accruals and when investors do not pay attention to the firm. They are less informative when analysts disagree with each other. Overall, these results point to the value of analyst forecast revisions following earnings announcements.
| Author | : Lise Newman Graham |
| Publisher | : |
| Total Pages | : 334 |
| Release | : 1993 |
| Genre | : Corporate profits |
| ISBN | : |
| Author | : Michael J. Jung |
| Publisher | : |
| Total Pages | : 42 |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
The most prevalent forecasts of firms' long-term earnings issued by analysts are two-year-ahead earnings per share (EPS) estimates. When introduced by analysts, two-year-ahead EPS estimates set market expectations for firms' future earnings. Subsequent revisions to these estimates are highly correlated with contemporaneous changes in stock prices. We examine whether such revisions are sufficiently predictable to enable investors to earn abnormal returns on hedged portfolios. We find that analyst forecast revisions are predictable and document an implementable strategy for investors. Consistent with investors' fixation on unscaled EPS, the strategy earns positive abnormal returns using unscaled EPS revisions but not when revisions are scaled by the level of the EPS estimate or the stock price. Abnormal returns are found for firms with low analyst coverage, consistent with a greater initial mispricing from analyst optimism for firms with poorer information environments.
| Author | : William Kross |
| Publisher | : |
| Total Pages | : 44 |
| Release | : 2020 |
| Genre | : |
| ISBN | : |
This paper provides evidence that firms that have consistently met or beaten analysts' earnings expectations (MBE) provide more frequent “bad news” management forecasts than firms with no established string of MBE, particularly when existing analyst forecasts are optimistic. This suggests that firms with a consistent MBE record are more likely to guide analysts' expectations downward to avoid breaking the consistency. Subsequent analyst forecast revisions following bad news management forecasts issued by these firms are dampened, implying that analysts suspect that these forecasts may be opportunistic. The relation between management forecasts and MBE consistency is stronger after Regulation FD.
| Author | : Xiaobo Dong |
| Publisher | : |
| Total Pages | : 38 |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
We examine the informativeness of analyst forecast revisions that are directionally inconsistent with prior stock price movements (sign-inconsistent revisions). Sign-inconsistent revisions represent approximately one-half of the forecast revisions from 1995 through 2010. Our tests indicate that sign-inconsistent revisions are less informative than are sign-consistent revisions. Sign-inconsistent revisions are less likely to be closer to actual earnings realizations and they generate smaller stock price reactions. We also find evidence that sign-inconsistent revisions are associated with analysts' economic incentives to generate trading volume and their behavioral limitations related to information uncertainty. These results suggest that sign-inconsistent revisions do not necessarily benefit investors.
| Author | : Kunio Ito |
| Publisher | : Springer |
| Total Pages | : 337 |
| Release | : 2014-07-08 |
| Genre | : Business & Economics |
| ISBN | : 4431547924 |
Despite the globalization of accounting standards occurring through convergence to International Financial Reporting Standards, local accounting systems are deeply intertwined with each country’s unique institutions such as its corporate system, disclosure practices and enforcement mechanisms. First, this book empirically analyzes the effects of globalization and localization of accounting rules on corporate behavior such as earnings management, signaling, investment behavior and dividend payout policy. Second, the book unravels the economic consequences of disclosure based on the concept of self-disciplining enforcement such as management forecasts, environmental disclosures and risk disclosures by Japanese firms. This volume is a step forward in understanding the link between accounting and corporate behavior based on a new institutional accounting approach.
| Author | : Sami Keskek |
| Publisher | : |
| Total Pages | : 45 |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
We separate analyst forecast revisions into components representing industry-wide and firm-specific news. Using the relation between analyst forecast revisions and upcoming news to estimate how completely analysts incorporate their private information in their forecasts, we show that analysts incorporate a smaller proportion of industry-wide news than firm-specific news in their forecasts, particularly when the underlying news is bad. Post-forecast-revision drift is strongly associated with the private industry-wide information that analysts withhold from their forecast revisions. Furthermore, analysts' information withholding varies predictably with their incentives. Unlike prior research that attributes post-forecast revision drift to delayed market response to news in forecast revisions, our findings suggest that the drift arises because investors are unable to anticipate the news that analysts withhold from their forecast revisions. Our study sheds light on analysts' role in conveying firm-specific and industry-wide news to investors and on the implications for post-forecast-revision drift.
| Author | : Michael H. Neelan |
| Publisher | : Nova Publishers |
| Total Pages | : 192 |
| Release | : 2007 |
| Genre | : Business & Economics |
| ISBN | : 9781600213809 |
Preface; The Role of Revenues and Costs in CEO Compensation; The Importance of Intellectual Capital Reporting: Perspectives from Finance Professionals; Has Regulation Changed the Market's Reward for Meeting or Beating Expectations?; Reaction of the Brazilian Stock Market to Positive and Negative Shocks; Earnings Management to Meet Earnings Benchmarks: Evidence from Japan; Audit in Ukraine; Auditor Reputation and Auditor Independence: Evidence from an Emerging Market; Trends of the Returns-Earnings Associations Over the Last Three Decades; Managers' Discretionary Behaviour, Earnings Management and Corporate Governance: An Empirical International Analysis; Index.
