Open AccessPosted Content
Earnings Predictability and Bias in Analysts' Earnings Forecasts
TLDR
In this paper, the authors examine cross-sectional differences in the optimistic behavior of financial analysts and investigate whether the predic- tive accuracy of past information (e.g., time-series of earnings, past returns, etc.) is associated with the magnitude of the bias in analysts' earnings fore-casts.Abstract:
This paper examines cross-sectional differences in the optimistic behavior of financial analysts. Specifically, we investigate whether the predic- tive accuracy of past information (e.g., time-series of earnings, past returns, etc.) is associated with the magnitude of the bias in analysts' earnings fore- casts. We posit that there is higher demand for non-public information for firms whose earnings are difficult to accurately predict than for firms whose earnings can be accurately forecasted using public information. Assuming that opti- mism facilitates access to management's non-public information, we hypoth- esize that analysts will issue more optimistic forecasts for low predictability firms than for high predictability firms. Our results support this hypothesis.read more
Citations
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Capital markets research in accounting
TL;DR: This paper reviewed empirical research on the relation between capital markets and financial statements and found that the principal sources of demand for capital markets research in accounting are fundamental analysis and valuation, tests of market efficiency, and the role of accounting numbers in contracts and the political process.
Journal ArticleDOI
The Financial Reporting Environment: Review of the Recent Literature
TL;DR: The authors provide a framework for analyzing the three main decisions that shape the corporate information environment in a capital markets setting: (1) managers' voluntary reporting and disclosure decisions, (2) reporting and disclosures mandated by regulators, and (3) reporting decisions by third-party intermediaries.
Journal ArticleDOI
Management's Incentives to Avoid Negative Earnings Surprises
TL;DR: This paper found that firms with higher transient institutional ownership, greater reliance on implicit claims with their stakeholders, and higher value-relevance of earnings are more likely to meet or exceed expectations at the earnings announcement.
Journal ArticleDOI
Analyzing the Analysts: Career Concerns and Biased Earnings Forecasts
Harrison Hong,Jeffrey D. Kubik +1 more
TL;DR: The authors found that relatively accurate past forecasts lead to favorable career outcomes such as remaining at or moving up to a high status (large, prestigious) brokerage house, and that optimistic forecasts relative to the consensus increase the chances of favorable job separations.
Journal ArticleDOI
The financial reporting environment: Review of the recent literature
TL;DR: The authors review current research on the three main decisions that shape the corporate information environment in capital market settings: (1) managers' voluntary disclosure decisions, (2) disclosures mandated by regulators, and (3) reporting decisions by analysts.
References
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Journal ArticleDOI
Firm characteristics and analyst following
TL;DR: This paper examined the major determinants of the number of analysts following a firm and proposed a simple model of analyst following and several firm characteristics are suggested that are likely to influence the extent of a firm's analyst following by either affecting the aggregate demand for or supply of analyst services or both for the firm.
Book
Analyst's forecasts as earnings expectations
TL;DR: This paper examined three composite analyst forecast of earnings per share as proxies for expected earnings and found that the most current forecast weakly dominates the mean and median forecasts in accuracy, and that forecast dates are more relevant for determining accuracy than individual error.
Journal ArticleDOI
Analyst following and institutional ownership
Posted Content
Self-selection and Analyst Coverage
TL;DR: In this paper, the authors examine implications of the conjecture that analysts announce recommendations and forecasts selectively, based upon whether their information about the firm is favorable, and provide empirical evidence on this alternative.