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Journal articles on the topic 'Earnings forecasts'

Author: Grafiati

Published: 4 June 2021

Last updated: 29 January 2023

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1

Keung, Edmund C. "Do Supplementary Sales Forecasts Increase the Credibility of Financial Analysts’ Earnings Forecasts?" Accounting Review 85, no. 6 (November 1, 2010): 2047–74. http://dx.doi.org/10.2308/accr.2010.85.6.2047.

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ABSTRACT: This study examines whether the market reacts more strongly to earnings forecast revisions when financial analysts supplement their earnings forecasts with sales forecasts. I find that earnings forecast revisions supplemented with sales forecast revisions have a greater impact on security prices than do stand-alone earnings forecast revisions, controlling for the incremental information content in sales forecasts. Supplemented earnings forecasts are more accurate ex post, controlling for other individual analyst characteristics. Results are robust to controlling for earnings persiste

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2

Wawryszuk-Misztal, Anna. "Earnings forecasts errors in prospectuses: evidence from initial public offerings on the Warsaw Stock Exchange." Equilibrium 12, no. 2 (June 30, 2017): 229. http://dx.doi.org/10.24136/eq.v12i2.12.

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Research background: Several studies investigated the issue of accuracy of earnings fore-casts disclosed in IPO prospectus because of its importance in the investor’s decisions. Disclosing earnings forecasts can reduce information asymmetry and encourage potential investors to buy offered shares. The accuracy of earnings forecasts, and especially its deter-minants, was explored by some researchers, but for Polish companies such studies have not been conducted.Purpose of the article: The first objective of this study is to examine the bias and accuracy of earnings forecasts disclosed in IPO pro

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3

Zhang, Jin, and Haeyoung Shin. "Are Analysts Overoptimistic about the Prospects of Sin Firms?" International Journal of Financial Research 8, no. 4 (September 11, 2017): 99. http://dx.doi.org/10.5430/ijfr.v8n4p99.

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We investigate the association between the bias and accuracy of consensus analysts’ earnings forecasts and whether a firm is a sin firm or not. We measure analyst forecast bias as the difference between the consensus earnings forecast and the actual earnings, scaled by the stock price. We measure analyst forecast accuracy as the negative of the absolute value of the difference between the firms’ forecasted and actual earnings, scaled by the stock price. We find a positive association between the level of forecast optimism and sin firm membership. We find a negative association between the leve

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Berger, Philip G., Charles G. Ham, and Zachary R. Kaplan. "Do Analysts Say Anything About Earnings Without Revising Their Earnings Forecasts?" Accounting Review 94, no. 2 (June 1, 2018): 29–52. http://dx.doi.org/10.2308/accr-52164.

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ABSTRACT Analysts are selective about which forecasts they update and, thus, convey information about current quarter earnings even when not revising the current quarter earnings (CQE) forecast. We find that (1) textual statements, (2) share price target revisions, and (3) future quarter earnings forecast revisions all predict error in the CQE forecast. We document several reasons analysts sometimes omit information from the CQE forecast: to facilitate beatable forecasts by suppressing positive news from the CQE forecast, to herd toward the consensus, and to avoid small forecast revisions. We

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Eames, Michael, and Steven Glover. "Earnings Predictability And Broker-Analysts’ Earnings Forecast Bias." Journal of Applied Business Research (JABR) 33, no. 6 (November 1, 2017): 1285–302. http://dx.doi.org/10.19030/jabr.v33i6.10061.

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Scholars have reasoned that analysts issue optimistic forecasts to improve their access to managers’ private information when earnings are unpredictable. While this requires a managerial preference for analyst forecast optimism, the observed walk-down of analyst expectations to beatable forecasts is consistent with a managerial preference for pessimism in short-horizon forecasts. Using data from various sample periods, alternative model specifications, and various measures of earnings unpredictability, we find that pessimism, not optimism, in short-horizon forecasts is associated with increasi

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Chi, Yu-Ho, and David A. Ziebart. "Benefits of management disclosure precision on analysts’ forecasts." Review of Accounting and Finance 13, no. 4 (November 4, 2014): 371–99. http://dx.doi.org/10.1108/raf-06-2012-0061.

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Purpose – The purpose of this paper is to examine the impact of management’s choice of forecast precision on the subsequent dispersion and accuracy of analysts’ earnings forecasts. Design/methodology/approach – Using a sample of 3,584 yearly management earnings per share (EPS) forecasts and 10,287 quarterly management EPS forecasts made during the period of 2002-2007 and collected from the First Call database, the authors controlled for factors previously found to impact analysts’ forecast accuracy and dispersion and investigate the link between management forecast precision and attributes of

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Brown, Lawrence D., and Kelly Huang. "Recommendation-Forecast Consistency and Earnings Forecast Quality." Accounting Horizons 27, no. 3 (April 1, 2013): 451–67. http://dx.doi.org/10.2308/acch-50482.

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SYNOPSIS: We investigate the implications of recommendation-forecast consistency for the informativeness of stock recommendations and earnings forecasts and the quality of analysts' earnings forecasts. Stock recommendations and earnings forecasts are often issued simultaneously and evaluated jointly by investors. However, the two signals are often inconsistent with each other. Defining a recommendation-forecast pair as consistent if both of them are above or below their existing consensus, we find that 58.3 percent of recommendation-forecast pairs are consistent in our sample. We document that

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Ciftci, Mustafa, and Feras M. Salama. "Stickiness in Costs and Voluntary Disclosures: Evidence from Management Earnings Forecasts." Journal of Management Accounting Research 30, no. 3 (November 1, 2017): 211–34. http://dx.doi.org/10.2308/jmar-51966.

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ABSTRACT We investigate the relationship between cost stickiness and management earnings forecasts. Prior research suggests that earnings are more volatile for sticky cost firms resulting in greater earnings forecast errors. The greater forecast errors might increase investors' demand for information and induce managers to issue earnings forecasts. Alternatively, managers might refrain from issuing earnings forecasts for sticky cost firms because greater forecast errors might damage managers' credibility and adversely affect their job security. We find that cost stickiness is positively associ

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9

Lobo, Gerald J., Minsup Song, and Mary Harris Stanford. "The Effect of Analyst Forecasts during Earnings Announcements on Investor Responses to Reported Earnings." Accounting Review 92, no. 3 (August 1, 2016): 239–63. http://dx.doi.org/10.2308/accr-51556.

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ABSTRACT Despite the increased frequency of analyst forecasts during earnings announcements, empirical evidence on the interaction between the information in the earnings announcement and these forecasts is limited. We examine the implications of reinforcing and contradicting analyst forecast revisions issued during earnings announcements (days 0 and +1) on the market response to unexpected earnings. We classify forecast revisions as reinforcing (contradicting) when the sign of analyst forecast revisions agrees (disagrees) with the sign of unexpected earnings. We document larger (smaller) earn

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10

Yeo, Gillian Hian Heng, and David A. Ziebart. "An Empirical Test of the Signaling Effect of Management's Earnings Forecasts: A Decomposition of the Earnings Surprise and Forecast Surprise Effects." Journal of Accounting, Auditing & Finance 10, no. 4 (October 1995): 787–802. http://dx.doi.org/10.1177/0148558x9501000406.

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When corporate management issues an earnings forecast there are potentially two surprises. One potential surprise is that a forecast was issued and the other is the surprise in the earnings forecast. Accordingly, the observed stock market reaction to management earnings forecasts may be due to one or the other, or both. This study decomposes the cross-sectional variability in stock market reactions to management earnings forecasts into the portions attributable to the forecast surprise and the earnings surprise. The results indicate that the market's reaction is a function of both the earnings

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Petruska, Karin A. "The Informativeness Of Cash Flow Forecasts And The Regulation FD Environment." Journal of Business & Economics Research (JBER) 9, no. 6 (May 24, 2011): 29. http://dx.doi.org/10.19030/jber.v9i6.4377.

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Prior literature shows that analysts forecast estimates serve as a proxy for the markets and investors beliefs which are unobservable. For decades, analysts have generated forecasts for use in valuation models including future estimates of earnings and growth. Yet, only recently, analysts have begun to voluntarily provide cash flow per share forecasts at the same time they are producing earnings per share forecasts for firms they follow. This study addresses whether the tendency of analysts to issue cash flow per share forecasts, as a result of changes in the regulatory environment, affects fo

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Barron, Orie E., Donal Byard, and Yong Yu. "Earnings Surprises that Motivate Analysts to Reduce Average Forecast Error." Accounting Review 83, no. 2 (March 1, 2008): 303–25. http://dx.doi.org/10.2308/accr.2008.83.2.303.

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Large earnings surprises and negative earnings surprises represent more egregious errors in analysts' earnings forecasts. We find evidence consistent with our expectation that egregious forecast errors motivate analysts to work harder to develop or acquire relatively more private information in an effort to avoid future forecasting failures. Specifically, we find that after large or negative earnings surprises there is a greater reduction in the error in individual analysts' forecasts of future earnings, and these individual forecasts are based more heavily on individual analysts' private info

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Frischmann, Peter, K. C. Lin, and Dilin Wang. "Analyst reaction to non-articulation between the balance sheet and the statement of cash flows." Journal of Applied Accounting Research 21, no. 1 (November 19, 2019): 163–84. http://dx.doi.org/10.1108/jaar-02-2019-0036.

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Purpose The purpose of this paper is to investigate the effect of non-articulation on analyst earnings forecast quality. The authors look for evidence on the relationship between non-articulation and analyst earnings forecast properties: forecast inaccuracy, forecast dispersion and forecast bias. Design/methodology/approach The empirical tests are primarily based analyst earnings and cash flow forecasts covered by Institutional Broker Estimate System and financial statement information obtained from Compustat North America database. Findings The authors hypothesize and find that non-articulati

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Hirst, D. Eric, Lisa Koonce, and Shankar Venkataraman. "Management Earnings Forecasts: A Review and Framework." Accounting Horizons 22, no. 3 (September 1, 2008): 315–38. http://dx.doi.org/10.2308/acch.2008.22.3.315.

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SYNOPSIS: In this paper, we provide a framework in which to view management earnings forecasts. Specifically, we categorize earnings forecasts as having three components—antecedents, characteristics, and consequences—that roughly correspond to the timeline associated with an earnings forecast. By evaluating management earnings forecast research within the context of this framework, we render three conclusions. First, forecast characteristics appear to be the least understood component of earnings forecasts—both in terms of theory and empirical research—even though it is the component over whic

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Baginski, Stephen P., John M. Hassell, and Michael D. Kimbrough. "The Effect of Legal Environment on Voluntary Disclosure: Evidence from Management Earnings Forecasts Issued in U.S. and Canadian Markets." Accounting Review 77, no. 1 (January 1, 2002): 25–50. http://dx.doi.org/10.2308/accr.2002.77.1.25.

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Citing fear of legal liability as a partial explanation, prior research documents (1) managers' reluctance to voluntarily disclose management earnings forecasts, and (2) greater forecast disclosure frequencies in periods of bad news. We provide evidence on how management earnings forecast disclosure differs between the United States (U.S.) and Canada, two otherwise similar business environments with different legal regimes. Canadian securities laws and judicial interpretations create a far less litigious environment than exists in the U.S. We find a greater frequency of management earnings for

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Clor-Proell, Shana M., D. Eric Hirst, Lisa Koonce, and Nicholas Seybert. "How Disaggregated Forecasts Influence Investor Response to Subsequent Earnings Announcements." Journal of Financial Reporting 4, no. 1 (March 2019): 157–71. http://dx.doi.org/10.2308/jfir-52362.

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Firms often issue disaggregated earnings forecasts, and prior research reveals benefits to doing so. However, we hypothesize and experimentally find that the benefits of disaggregated forecasts do not necessarily carry over to the time of actual earnings announcements. Rather, disaggregated forecasts create multiple points of possible comparison between the forecast and the subsequent earnings announcement. Thus, when firms disaggregate forecasts and subsequently release disaggregated actual earnings numbers, investors reward firms that beat those multiple benchmarks, but punish firms that mis

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Luo, Bing. "Short-term management earnings forecasts and earnings management through real activities manipulation." Asian Review of Accounting 28, no. 1 (November 20, 2019): 110–38. http://dx.doi.org/10.1108/ara-09-2018-0168.

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Purpose The purpose of this paper is to investigate the association between managers’ short-term, quarterly earnings forecast characteristics and earnings management through real activities manipulation. Design/methodology/approach Using a propensity-score matched sample from 2000 to 2015, the author examines whether, compared to non-issuers, firms issuing short-term earnings forecasts exhibit abnormal levels of earnings management through the manipulation of real activities such as acceleration of sales, changes in shipment schedules and delaying R&D and maintenance expenditures. Findings

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Pan, Shanshan, and Zhaohui Randall Xu. "The association of analysts’ cash flow forecasts with stock recommendation profitability." International Journal of Accounting & Information Management 28, no. 2 (March 5, 2020): 343–61. http://dx.doi.org/10.1108/ijaim-05-2019-0055.

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Purpose The purpose of this paper is to examine whether analysts’ cash flow forecasts improve the profitability of their stock recommendations and whether the positive effect of cash flow forecasts on analysts’ stock recommendation performance varies with firms’ earnings quality. Design/methodology/approach To test the authors’ predictions, they identify a sample of 161,673 stock recommendations with contemporaneous earnings forecasts and/or cash flow forecasts and regress market-adjusted stock returns on a binary variable that proxies for the issuance of cash flow forecasts while controlling

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19

Givoly, Dan, Carla Hayn, and Reuven Lehavy. "The Quality of Analysts' Cash Flow Forecasts." Accounting Review 84, no. 6 (November 1, 2009): 1877–911. http://dx.doi.org/10.2308/accr.2009.84.6.1877.

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ABSTRACT: This study examines properties of analysts' cash flow forecasts and compares them to those exhibited by analysts' earnings forecasts. Our results indicate that analysts' cash flow forecasts are less accurate than analysts' earnings forecasts and improve at a slower rate during the forecast period. Further, cash flow forecasts appear to be a nai¨ve extension of analysts' earnings forecasts, thus providing limited information on expected changes in working capital. We also find that analysts' forecasts of cash flows are of limited information content and are only weakly associated with

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20

Salamouris, Ioannis S., and Yaz Gulnur Muradoglu. "Estimating analyst's forecast accuracy using behavioural measures (Herding) in the United Kingdom." Managerial Finance 36, no. 3 (February 23, 2010): 234–56. http://dx.doi.org/10.1108/03074351011019564.

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PurposeThe purpose of this paper is to identify herding behaviour on financial markets and measure the herding behaviour impact on the accuracy of analysts' earnings forecasts.Design/methodology/approachTwo alternative measures of herding behaviour, on analysts' earnings forecasts are proposed. The first measure identifies herding as the tendency of analysts to forecast near the consensus. The second measure identifies herding as the tendency of analysts to follow the most accurate forecaster. This paper employs the method of The Generalised Method of Moments in order to relax any possible bia

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Ahmed, Kamran, Muhammad Nurul Houqe, John Hillier, and Steven Crockett. "Properties of analysts’ consensus cash flow forecasts for Australian firms." Accounting Research Journal 33, no. 1 (January 2, 2020): 128–47. http://dx.doi.org/10.1108/arj-11-2017-0197.

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Purpose The purpose of this paper is to determine the properties of analysts’ cash flows from operations (CFO) forecast generated for Australian listed firms as a productive activity, within the wider processes of financial disclosure in Australia. Design/methodology/approach Two categories of criteria are adopted: first, basic predictive statistical performance relative to a benchmark model and earnings forecasts; and second, relevance for equity pricing, as indicated by the market reaction to cash flow or forecast error reactions. The final sample comprised 2,138 observations between 2001 an

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Herrmann, Don, and Wayne B. Thomas. "Rounding of Analyst Forecasts." Accounting Review 80, no. 3 (July 1, 2005): 805–23. http://dx.doi.org/10.2308/accr.2005.80.3.805.

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We find that analyst forecasts of earnings per share occur in nickel intervals at a much greater frequency than do actual earnings per share. Analysts who round their earnings per share forecasts to nickel intervals exhibit characteristics of analysts who are less informed, exert less effort, and have fewer resources. Rounded forecasts are less accurate and the negative relation between rounding and forecast accuracy increases as the rounding interval increases from nickel to dime, quarter, half-dollar, and dollar. An examination of announcement period returns reveals that market expectations

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Lopez, Thomas J., and Lynn Rees. "The Effect of Beating and Missing Analysts' Forecasts on the Information Content of Unexpected Earnings." Journal of Accounting, Auditing & Finance 17, no. 2 (April 2002): 155–84. http://dx.doi.org/10.1177/0148558x0201700204.

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This study investigates whether the market rewards (penalizes) firms for meeting (not meeting) analysts' earnings forecasts. Specifically, we examine the market response to positive and negative forecast errors. In addition, we examine whether the sensitivity of stock prices to positive or negative forecast errors is affected by the firms' history of consistently beating or missing analysts' forecasts. The results indicate that the earnings multiple applied to positive unexpected earnings is significantly greater than for negative unexpected earnings. In addition, we find that after controllin

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Umezawa, Toshihiro, and Ujo Goto. "Corporate ownership structure and management earnings forecast." Corporate Ownership and Control 4, no. 3 (2007): 247–50. http://dx.doi.org/10.22495/cocv4i3c2p2.

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The purpose of this paper is to examine how the structure of corporate ownership impacts the accuracy of management earning forecasts in Japan. An evaluation of the financial reporting reform from 2000 is also presented. As a result, corporate ownership structure variables, such as managerial ownership, financial institution ownership, foreign investment ownership and corporation ownership, are negatively associated with the accuracy of management earnings forecast. We find that corporate ownership structure makes the manager announce more accurate management earnings forecasts. In addition, t

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Park, Hyung Ju, and Joong-Seok Cho. "Earnings Transparency and Financial Analysts’ Target Price Forecasts." International Journal of Financial Research 11, no. 4 (June 28, 2020): 1. http://dx.doi.org/10.5430/ijfr.v11n4p1.

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This paper examines the effect of earnings transparency on analysts’ target price forecast properties. The issuance of target price forecasts by financial analysts is a very recent event and target price forecasts are regarded as the most summarized and explicit estimate of the postulated future value of the firm.The sample consists of financial analysts’ forecasts of annual target price issued for firms listed on U.S. stock exchanges from 2001 to 2017. We measure each firm’s earnings transparency as the contemporaneous co-movement between firm’s earnings and change in earnings and stock retur

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Eames, Michael J., and Steven M. Glover. "Earnings Predictability and the Direction of Analysts' Earnings Forecast Errors." Accounting Review 78, no. 3 (July 1, 2003): 707–24. http://dx.doi.org/10.2308/accr.2003.78.3.707.

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Das et al. (1998) suggest that as earnings become less predictable, analysts issue increasingly optimistic forecasts to please managers and consequently gain, or at least limit the loss of, access to managers' private information. We reexamine the association between earnings forecast error and earnings predictability because there is evidence suggesting that deliberate earnings forecast optimism is not an effective mechanism for gaining access to managers' information (e.g., Eames et al. 2002; Matsumoto 2002). We document associations between earnings level and both forecast error and earning

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Miller, Jeffrey S., and Lisa M. Sedor. "Do Stock Prices Influence Analysts' Earnings Forecasts?" Behavioral Research in Accounting 26, no. 1 (September 1, 2013): 85–108. http://dx.doi.org/10.2308/bria-50626.

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ABSTRACT This study uses an experiment with professional financial analysts to examine whether stock prices influence analysts' earnings forecasts. The findings indicate that analysts' revised forecasts made in response to a management earnings forecast differ depending on the level of uncertainty communicated by management's guidance and the stock price reaction to it. Lower (higher) stock price leads to lower (higher) analysts' forecasts when uncertainty about future earnings is high, but not when uncertainty about future earnings is low. Overall, the evidence suggests that the documented as

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Doran, David T., and Robert Nachtmann. "The Association of Stock Distribution Announcements and Earnings Performance." Journal of Accounting, Auditing & Finance 3, no. 2 (April 1988): 113–32. http://dx.doi.org/10.1177/0148558x8800300203.

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This paper analyzes the association of unexpected earnings with stock dividend and stock split announcements. Unexpected earnings are modeled as the percentage deviation of actual earnings from expected. Value Line's earnings forecasts are used as a surrogate for the market's timely expectation of future earnings. The primary findings are: (1) postdistribution earnings realizations are greater than expected; and (2) deviations of realized earnings from expected are (a) directly related to the size of the stock distribution and (b) inversely related to the level of market anticipation of the ev

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Guttman, Ilan. "The Timing of Analysts' Earnings Forecasts." Accounting Review 85, no. 2 (March 1, 2010): 513–45. http://dx.doi.org/10.2308/accr.2010.85.2.513.

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ABSTRACT: Existing literature assumes that the order and timing of analysts' earnings forecasts are determined exogenously. However, analysts choose when to issue their forecasts. This study develops a model that endogenizes the timing decision of analysts and analyzes their equilibrium timing strategies. In the model, analysts face a trade-off between the timeliness and the precision of their forecasts. The model introduces a timing game with two analysts, derives and analyzes its unique pure strategies equilibrium, and provides new empirical predictions about the precision and timing of anal

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Wang, Tina. "Does the Equity Market Reward “Superior” Management Earnings Forecast? Evidence from the U.S. Quarterly Earnings Guidance." Asia-Pacific Management Accounting Journal 16, no. 3 (December 1, 2021): 1–30. http://dx.doi.org/10.24191/apmaj.v16i3-01.

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This paper examines whether equity markets reward the controversial practice of issuing short-term management earnings forecasts. Using a large sample of quarterly earnings forecasts, this research found that firms may temporarily reduce stock price volatility by issuing quarterly earnings forecasts. Furthermore, the analysis showed that not all guidance issuers are equally rewarded by equity capital markets. The benefits of reduced stock price volatility and favorable market valuation primarily accrue to firms with a track record of supplying accurate and timely short-term earnings forecasts.

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Zhang, Li. "The Effect of Ex Ante Management Forecast Accuracy on the Post-Earnings-Announcement Drift." Accounting Review 87, no. 5 (April 1, 2012): 1791–818. http://dx.doi.org/10.2308/accr-50197.

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ABSTRACT I examine the effect of ex ante management forecast accuracy on the post-earnings-announcement drift when management forecasts about next quarter's earnings are bundled with current quarter's earnings announcements. I build a composite measure of ex ante management forecast accuracy that takes into account forecast ability, forecast difficulty, and forecast environment. The results show that the bundled forecasts with higher ex ante accuracy mitigate investors' under-reaction to current earnings and reduce the magnitude of the post-earnings-announcement drift. Data Availability: The d

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Kirk, Marcus P., David A. Reppenhagen, and Jennifer Wu Tucker. "Meeting Individual Analyst Expectations." Accounting Review 89, no. 6 (June 1, 2014): 2203–31. http://dx.doi.org/10.2308/accr-50828.

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ABSTRACT The expectations management literature has so far focused on firms meeting the analyst consensus forecast—the expectations of analysts as a group—at earnings announcements. In this study we argue that investors may use individual analyst forecasts as additional benchmarks in evaluating reported earnings because the consensus forecast underutilizes private information contained in individual analyst forecasts. We predict that measures reflecting such private information have incremental explanatory power over the consensus forecast for the market's reaction to earnings news. We find re

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Harris, Richard D. F., and Pengguo Wang. "Model-based earnings forecasts vs. financial analysts' earnings forecasts." British Accounting Review 51, no. 4 (June 2019): 424–37. http://dx.doi.org/10.1016/j.bar.2018.10.002.

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Ho, Li-Chin Jennifer, and Jeffrey Tsay. "Analysts' Forecasts of Taiwanese Firms' Earnings: Some Empirical Evidence." Review of Pacific Basin Financial Markets and Policies 07, no. 04 (December 2004): 571–97. http://dx.doi.org/10.1142/s0219091504000238.

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This study examines the accuracy and bias associated with the analysts' earnings forecasts of Taiwanese firms. Using the forecast data of individual analysts over 1991–1997 from the I/B/E/S database, we find that analysts' forecasts of earnings are generally more accurate than the predictions of a naïve forecasting model. However, this superiority seems to be largely confined to shorter forecast horizons. We also find that the analysts' earnings forecasts of Taiwanese firms are optimistically biased and that the bias depends on the nature of the earnings news. In addition, analysts' forecasts

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Wahab, Susan, Karen Teitel, and Bernard Morzuch. "How Analysts and Whisperers Use Fundamental Accounting Signals to Make Quarterly EPS Forecasts." Journal of Accounting, Auditing & Finance 32, no. 3 (November 15, 2015): 401–22. http://dx.doi.org/10.1177/0148558x15613040.

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We examine the relative efficiency of whisperers’ and analysts’ forecasts of one-quarter-ahead earnings per share (EPS) and identify commonalities and differences in their use of fundamentals to forecast earnings. Results suggest that (a) fundamentals that focus on sales and cost of sales are relevant in explaining one-quarter-ahead EPS changes; (b) whisperers focus on cash flow fundamentals and accrual-based earnings measures in their one-quarter-ahead forecasts, whereas analysts focus on only cash flow fundamentals; and (c) although neither analysts nor whisperers fully incorporate informati

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Irvine, Paul J. "Analysts' Forecasts and Brokerage-Firm Trading." Accounting Review 79, no. 1 (January 1, 2004): 125–49. http://dx.doi.org/10.2308/accr.2004.79.1.125.

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Using unique data on brokerage-firm trading, I examine whether analysts' earnings forecasts and stock recommendations affect their brokerage firms' share of trading in the forecast stocks. I find that individual analyst's forecasts that differ from the consensus forecast generate significant brokerage-firm trading in the forecast stocks in the two weeks after the forecast release date, affirming that analysts' forecasts affect their brokers' commission revenue. However, I find no evidence that analysts' forecast errors—the difference between forecast earnings and actual earnings—increase broke

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He, Ying. "The Effect of Brokerage Firm Size on Analysts’ Earnings Forecast Accuracy: Evidence from the Culture Media Industry." BCP Business & Management 30 (October 24, 2022): 140–47. http://dx.doi.org/10.54691/bcpbm.v30i.2414.

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The factors influencing analysts’ earnings forecast accuracy are a popular research topic today. Some researchers have found that brokerage firm size affects analysts’ earnings forecast accuracy. However, there is a research gap in the effect of brokerage firm size on analysts’ earnings forecast accuracy in a particular industry. As a result, this study investigates the link between brokerage company size and analysts’ earnings prediction accuracy by collecting and comparing analysts’ earnings forecast data from major brokerage companies and analysts’ earnings forecast data from small and medi

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Ong, Chui Zi, Rasidah Mohd-Rashid, Waqas Mehmood, and Ahmad Hakimi Tajuddin. "Does disclosure of earnings forecasts regulation affect the valuation of IPOs? Evidence from an emerging country." Asian Review of Accounting 29, no. 4 (October 6, 2021): 558–78. http://dx.doi.org/10.1108/ara-09-2020-0142.

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PurposeThis paper aimed to explore the effect of a regulatory change pertaining to earnings forecasts disclosure from a mandatory to a voluntary regime on the valuation of Malaysian initial public offerings (IPOs).Design/methodology/approachThe study employed ordinary least square (OLS) regression and quantile regression to analyse the impact of disclosure of earnings forecasts regulation on the valuation of IPOs which comprised 458 IPOs reported for the period 2000–2017 on Bursa Malaysia.FindingsThis paper revealed that the regulatory change in forecasted earnings disclosure from a mandatory

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Chin, Chen-Lung, Tyrone T. Lin, and Chia-Chi Lee. "Convertible Bonds Issuance Terms, Management Forecasts, and Earnings Management: Evidence from Taiwan Market." Review of Pacific Basin Financial Markets and Policies 08, no. 03 (September 2005): 543–71. http://dx.doi.org/10.1142/s0219091505000506.

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Convertible bond (CB) issuers have been required to include financial forecasts in prospectuses filed with the Taiwan Securities and Futures Commission (TSFC) since 1991. This study examines the association between CB issuance terms and the extent of optimistic initial earnings forecasts and earnings management, as well as the association between CB issuance terms and the extent of reported (post-managed) earnings forecasts. Empirical results indicate that: (1) the likelihood of the issuing company making an optimistic initial earnings forecast (positive initial forecast error) increases with

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Chen, Yu-Cheng, Chiung-Yao Huang, and Pei-I. Chou. "The Moderating Effect of Industry Concentration on the Relations Between External Attributes and the Properties of Analyst Earnings Forecast." Review of Pacific Basin Financial Markets and Policies 16, no. 03 (September 2013): 1350019. http://dx.doi.org/10.1142/s0219091513500197.

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Based on the work of earlier studies, the main objective of this study is to determine whether the properties of analyst earnings forecast are related to the interaction effects of external attributes and industry concentration that were not the focus of previous research. Specifically, this study examines the relations between external attributions and the properties of analyst earnings forecasts. Furthermore, we explore the moderating effect of industry concentration on the relations between external attributions and the properties of analyst earnings forecasts. Using data from Compustat and

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Barron, Orie E., and Pamela S. Stuerke. "Dispersion in Analysts' Earnings Forecasts as a Measure of Uncertainty." Journal of Accounting, Auditing & Finance 13, no. 3 (July 1998): 245–70. http://dx.doi.org/10.1177/0148558x9801300305.

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This study examines whether dispersion in analysts' earnings forecasts reflects uncertainty about firms' future economic performance. Prior research examining this issue has been inconclusive. These studies have concluded that forecast dispersion is likely to reflect factors other than uncertainty about future cash flows, such as uncertainty about the price irrelevant component of firms' financial reports (Daley et al. [1988]; Imhoff and Lobo [1992]). Abarbanell et al. (1995) argue that, if forecast dispersion after (i.e., conditional on) an earnings announcement reflects uncertainty about fir

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Goh, Jaimin, Sooin Kim, and Ju Hyoung Park. "Changes in the Timing of Analysts’ Forecast Revision after the Adoption of IFRS." Korean Accounting Information Association 22, no. 4 (December 31, 2022): 47–73. http://dx.doi.org/10.29189/kaiajfai.22.4.3.

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[Purpose] Management forecasts are recognized as more accurate than analysts forecasts under higher information uncertainty. The switch to IFRS is known as an increase in information uncertainty. We aim to find the impact of IFRS on the analyst’s use of management forecasts in revising their earnings forecasts. [Methodology] Focusing on the speed to reflect management forecasts into the analysts’ forecast revision, we use OLS regression to investigate the change in time spent in the revision before and after IFRS adoption. Further, we examine the moderating effect of the information amou

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Veenman, David, and Patrick Verwijmeren. "Do Investors Fully Unravel Persistent Pessimism in Analysts' Earnings Forecasts?" Accounting Review 93, no. 3 (July 1, 2017): 349–77. http://dx.doi.org/10.2308/accr-51864.

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ABSTRACT This study presents evidence suggesting that investors do not fully unravel predictable pessimism in sell-side analysts' earnings forecasts. We show that measures of prior consensus and individual analyst forecast pessimism are predictive of both the sign of firms' earnings surprises and the stock returns around earnings announcements. That is, we find that firms with a relatively high probability of forecast pessimism experience significantly higher announcement returns than those with a low probability. Importantly, we show that these findings are driven by predictable pessimism in

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Ham, Charles G., Zachary R. Kaplan, and Zawadi R. Lemayian. "Rationalizing forecast inefficiency." Review of Accounting Studies 27, no. 1 (October 1, 2021): 313–43. http://dx.doi.org/10.1007/s11142-021-09622-8.

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AbstractWe show analysts’ own earnings forecasts predict error in their own forecasts of earnings at other horizons, which we argue provides a measure of the extent to which analysts inefficiently use information. We construct our measure by exploiting two sources of variation in analysts’ incentives: (i) more recent forecasts have greater salience at the time of the earnings release so accuracy incentives are higher (lower) at shorter (longer) forecast horizons and (ii) analysts have greater incentives for optimism (pessimism) at longer (shorter) horizons. Consistent with these incentives aff

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Zhang, Xiaoxiang, Jo-Ting Wei, and Hsin-Hung Wu. "Family firm and analyst forecasts in an emerging economy." Management Decision 55, no. 9 (October 16, 2017): 2018–37. http://dx.doi.org/10.1108/md-07-2016-0517.

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Purpose The purpose of this paper is to examine how family firms affect analyst forecast dispersion, accuracy and optimism and how earnings smoothness as the moderating factor, affects these relationships in an emerging market context. Design/methodology/approach This paper uses the population sample of firms listed on the Taiwan Stock Exchange from 2009 to 2010 as the research sample, which includes 963 firm-year observations. Findings The findings show that analysts following family firms are more likely to have more dispersed, less accurate and more optimism biased forecasts than those foll

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Kato, Kazuo, Douglas J. Skinner, and Michio Kunimura. "Management Forecasts in Japan: An Empirical Study of Forecasts that Are Effectively Mandated." Accounting Review 84, no. 5 (September 1, 2009): 1575–606. http://dx.doi.org/10.2308/accr.2009.84.5.1575.

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ABSTRACT: We study management forecasts in Japan, where forecasts are effectively mandated but managers have considerable latitude over the numbers they release. We find that managers' initial earnings forecasts for a fiscal year are systematically upward-biased but that they revise their forecasts downward during the fiscal year so that most earnings surprises are non-negative. Managers' initial forecast optimism is inversely related to firm performance, and is more pronounced for firms with higher levels of insider ownership, smaller firms, and firms with a history of forecast optimism. The

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Agrawal, Anup, and Mark A. Chen. "Analyst Conflicts and Research Quality." Quarterly Journal of Finance 02, no. 02 (June 2012): 1250010. http://dx.doi.org/10.1142/s2010139212500103.

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This paper examines whether the quality of stock analysts' forecasts is related to conflicts of interest from their employers' investment banking (IB) and brokerage businesses. We consider four aspects of forecast quality: accuracy, bias, and revision frequency of quarterly earnings per share (EPS) forecasts and relative optimism in long-term earnings growth (LTG) forecasts. Using a unique dataset that contains the annual revenue breakdown of analysts' employers among IB, brokerage, and other businesses, we uncover two main findings. First, accuracy and bias in quarterly EPS forecasts appear t

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Gong, Guojin, Yue Li, and Ling Zhou. "Do management earnings forecasts fully reflect information in past earnings changes?" International Journal of Accounting & Information Management 27, no. 3 (August 5, 2019): 373–406. http://dx.doi.org/10.1108/ijaim-11-2017-0144.

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Purpose It has been widely documented that investors and analysts underreact to information in past earnings changes, a fundamental performance indicator. The purpose of this paper is to examine whether managers’ voluntary disclosure efficiently incorporates information in past earnings changes, whether analysts recognize and fully anticipate the potential inefficiency in management forecasts and whether managers’ potential forecasting inefficiency entirely results from intentional disclosure strategies or at least partly reflects managers’ unintentional information processing biases. Design/m

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Zhang, Weiqi, Huong Ha, and Hui Ting Evelyn Gay. "Analysts’ forecasts between last consensus and earning announcement date." Journal of Financial Reporting and Accounting 18, no. 4 (November 16, 2020): 779–93. http://dx.doi.org/10.1108/jfra-04-2020-0102.

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Purpose Thomson financial database reports a monthly consensus measure of analysts’ forecasts in the third week of every month, and firms’ earnings announcement dates are usually different from the last consensus calculation date. Thus, there is a gap between the last consensus calculation date and the earnings announcement date of firms. This study aims to address the question: “Do analysts issue forecasts that are slightly higher than the consensus number to increase the accuracy of their forecasts?” Design/methodology/approach This study is based on a sample of 91,172 quarterly earnings for

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Dechow, Patricia M., and Haifeng You. "Analysts' Motives for Rounding EPS Forecasts." Accounting Review 87, no. 6 (June 1, 2012): 1939–66. http://dx.doi.org/10.2308/accr-50226.

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ABSTRACT We investigate analysts' motives for rounding annual EPS forecasts (placing a zero or five in the penny location of the forecast). We first show that an intuitive reason for analysts to engage in rounding is in circumstances where the penny digit of the forecast is of less economic significance. By rounding, analysts reveal that their forecasts are not intended to be precise to the penny. We also show that analyst incentives impact the likelihood of rounding. Specifically, we predict that analysts will exert less effort forecasting earnings for firms that generate less brokerage or in

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