Real Earnings Management And The Properties Of Analysts Forecasts PDF Download
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| Author | : Lisa Eiler |
| Publisher | : |
| Total Pages | : 43 |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
Download Real Earnings Management and the Properties of Analysts' Forecasts Book in PDF, ePub and Kindle
We examine how analysts' earnings forecast properties vary when accounting information is more difficult to process. Specifically, we investigate whether analysts' forecast properties are associated with traditional real earnings management (REM) measures. We hypothesize and find that analysts' forecast errors and dispersion are greater for REM firms. Next, we investigate cross-sectional differences among REM firms based on the presence of management guidance. We find some evidence that management guidance reduces the association between REM and analysts' forecast error, and strong evidence that management guidance reduces the association between REM and dispersion. Finally, we investigate cross-sectional differences among REM firms based on their earnings management incentives. We find that firms with low earnings management incentives drive the association between REM and analysts' forecast error and dispersion. This result suggests earnings are most difficult to forecast for REM firms lacking obvious financial reporting objectives. Our results are consistent across numerous proxies for REM. To the best of our knowledge, our paper is the first to provide robust evidence of a relation between REM and the properties of analysts' forecasts.
| Author | : Fanghong Jiao |
| Publisher | : |
| Total Pages | : 117 |
| Release | : 2014 |
| Genre | : Business forecasting |
| ISBN | : |
Download Real Earnings Management, Habitually Meeting/closely Beating Analysts' Forecasts and Firms' Long-term Economic Performance Book in PDF, ePub and Kindle
Real earnings management (REM) has gained more attention due to its more extensive application than that before the enactment of Sarbanes-Oxley Act (SOX). Analysts' earnings forecast is an important benchmark for both the investors and the managers. Gunny (2010) finds that the signaling of future prospects overcomes the possibility of opportunism in firms that occasionally use REM to meet/closely beat benchmarks. However, the effect of repeatedly using REM to meet/beat earnings benchmarks has not been explored. This paper examines the long-term economic performance (Tobin's Q) of firms that utilize REM to habitually meet/closely beat analysts' earnings forecasts (HabitMBE). The results suggest that in equilibrium, while HabitMBE firms in general enjoy a market premium, HabitMBE firms that use REM repeatedly are penalized by investors, and the market premium disappears. Not surprisingly, I find that HabitMBE firms that have already used REM repeatedly try to curtail its use - a finding that is not found for occasional REM meeting/close beating firms. Another interesting finding of this study is that analysts' downward forecast revision in the long-run has a significantly negative effect on firms' economic performance, which prior studies have not clearly documented.
| Author | : Jinhan Pae |
| Publisher | : |
| Total Pages | : |
| Release | : 1999 |
| Genre | : |
| ISBN | : |
Download Earnings Management and Its Impact on the Information Content of Earnings and the Properties of Analysts' Forecasts Book in PDF, ePub and Kindle
| Author | : |
| Publisher | : |
| Total Pages | : |
| Release | : 1999 |
| Genre | : |
| ISBN | : |
Download Earnings Management and Its Impact on the Information Content of Earnings and the Properties of Analysts' Forecasts Book in PDF, ePub and Kindle
| Author | : Xiaohui Liu |
| Publisher | : |
| Total Pages | : 91 |
| Release | : 2004 |
| Genre | : |
| ISBN | : |
Download Analysts' Response to Earnings Management Book in PDF, ePub and Kindle
Previous literature studies analysts' earnings forecasts without considering firms' response to analysts' forecasts. This study improves upon previous research by considering firms' earnings management with respect to analysts' forecasts. I hypothesize that analysts understand these earnings management practices, and incorporate firms' expected behavior into their forecasts. I demonstrate that for firms with high tendencies and flexibilities to manage earnings downwards, and/or firms with negatively skewed earnings, analysts account for earnings management practices by lowering the otherwise optimal forecasts. Comparing analysts' consensus forecasts with proxy for non-strategic forecasts (otherwise optimal forecasts), I find that analysts' forecasts are systematically below the non-strategic forecasts for firm-quarters that have: high accounting reserves available to manage earnings downwards, high unmanaged earnings, low debt to equity ratios, negative forecasted earnings, and negatively skewed unmanaged earnings. These results suggest that analysts forecast below the non-strategic level in order to avoid the large optimistic forecast errors that occur when firms who cannot meet forecasts manage earnings downward. The test results also suggest that analysts forecast above the non-strategic forecasts when earnings are positively skewed, and/or when firms have high tendencies and flexibilities to manage earnings upwards.
| Author | : Cindy Durtschi |
| Publisher | : |
| Total Pages | : 58 |
| Release | : 2005 |
| Genre | : |
| ISBN | : |
Download Earnings Management? Alternative Explanations for Observed Discontinuities in the Frequency Distribution of Earnings, Earnings Changes, and Analyst Forecast Errors Book in PDF, ePub and Kindle
The discontinuities at zero in the frequency distributions of reported net income (deflated by beginning-of-period market capitalization), deflated change in net income, I/B/E/S quot;actualquot; earnings, and analysts' forecast errors are the most widely cited evidence of earnings management. We provide evidence consistent with alternative explanations for each of these discontinuities. We show that firms reporting small losses are priced significantly differently from firms that report small profits. An effect of this difference in pricing is that earnings to the left of zero are deflated by significantly different denominators than earnings to the right of zero inducing a discontinuity in the distributions of deflated net income and deflated changes in net income at zero. We also show that sample selection criteria may contribute to the discontinuity in these distributions as well as the discontinuity in I/B/E/S actual earnings. Finally, the presumption in the literature which focuses on the discontinuity at zero in the distribution of analysts' forecasts errors is that earnings are managed to meet or beat analysts' forecasts. We provide an alternative explanation: the discontinuity is caused by the fact that analysts' forecast errors tend to be much greater when the forecasts are optimistic than when they are pessimistic. This tendency leads to more small positive forecasts errors (pessimistic forecasts) than small negative forecast errors (optimistic forecasts).
| Author | : Patricia C. O'Brien |
| Publisher | : Forgotten Books |
| Total Pages | : 74 |
| Release | : 2018-02-26 |
| Genre | : Mathematics |
| ISBN | : 9780666405524 |
Download Analysts' Forecasts as Earnings Expectations (Classic Reprint) Book in PDF, ePub and Kindle
Excerpt from Analysts' Forecasts as Earnings Expectations Analysts' forecasts of earnings are increasingly used in accounting and finance research as expectations data, to proxy for the unobservable market expectation of a future 'realization. 'since a diverse set of forecasts is available at any time for a given firm's earnings. Composites are used to distill the information from the diverse set into a single expectation. This paper considers the relative merits of several composite forecasts as expectations data. One of the primary results is that the most current forecast available outperforms more commonly used aggregations such as the mean or the median. Mthis result is consistent-with forecasters incorporating information from others' previous predictions into their own. It also suggests that the forecast date, which previous research has largely ignored, is a characteristic relevant for distinguishing better forecasts. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
| Author | : Lixin Su |
| Publisher | : |
| Total Pages | : 326 |
| Release | : 2005 |
| Genre | : Corporations |
| ISBN | : |
Download Earnings Management and Forecast Guidance as Mechanisms to Meet Or Beat Analysts' Earnings Forecasts Book in PDF, ePub and Kindle
| Author | : Jeffery S. Abarbanell |
| Publisher | : |
| Total Pages | : 52 |
| Release | : 2012 |
| Genre | : |
| ISBN | : |
Download Biased Forecasts or Biased Earnings? The Role of Reported Earnings in Explaining Apparent Bias and Over/Underreaction in Analysts' Earnings Forecasts Book in PDF, ePub and Kindle
We demonstrate the role of three empirical properties of cross-sectional distributions of analysts' forecast errors in generating evidence pertinent to three important and heretofore separately analyzed phenomena studied in the analyst earnings forecast literature: purported bias (intentional or unintentional) in analysts' earnings forecasts, forecaster over/underreaction to information in prior realizations of economic variables, and positive serial correlation in analysts' forecast errors. The empirical properties of interest include: the existence of two statistically influential asymmetries found in the tail and the middle of typical forecast error distributions, the fact that a relatively small number of observations comprise these asymmetries and, the unusual character of the reported earnings benchmark used in the calculation of the forecast errors that fall into the two asymmetries that is associated with firm recognition of unexpected accruals. We discuss competing explanations for the presence of these properties of forecast error distributions and their implications for conclusions about analyst forecast rationality that are pertinent to researchers, regulators, and investors concerned with the incentives and judgments of analysts.Previously titled quot;Biased Forecasts or Biased Earnings? The Role of Earnings Management in Explaining Apparent Optimism and Inefficiency in Analysts' Earnings Forecastsquot.
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Download On the Properties of Financial Analyst Earnings Forecasts: Some New Evidence Book in PDF, ePub and Kindle
The importance of information in the formation process of security prices has a long history. The dissemination of information can take on different forms depending on the legal constraints. However, in all developed financial markets, financial analysts play a prominent role in collecting, analysing and diffusing information. Financial analysts typically supply future earnings estimates and stock picking advices in the form of recommendations. Earnings estimates are the essential part of security valuation by analysts and investors. They have even become an integral part of financial reporting in the financial press. Early research has accumulated evidence that these estimates are optimistically biased. More recently, empirical studies have found that analysts' optimistic bias is lessening, that its extent differs across analysts, firm characteristics and countries. Broadly speaking, this dissertation investigates the determinants of financial analyst forecasts bias. In the first essay, I examine the relative accuracy of European financial analysts' earnings forecasts and its determinants. I show that the results obtained for US analysts can not be generalised to European analysts who face a seemingly different job market as well as several different institutional and economic environments. In the second essay, I investigate the influence of financial analysts' location on their performance. More precisely, I examine the relative performance of local versus foreign analysts on Latin American stock markets. I find foreign analysts to be more timely and more accurate than their local counterparts. In addition, I document stronger price reactions after foreign analysts' forecast revisions than after those of local analysts. The third essay is related to the declining pattern of financial analyst forecast bias. In particular, I investigate whether US CEOs compensation arrangements give CEOs incentives to manipulate analysts' expectations downward in order to release ea.
