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Author: Henock Louis Publisher: ISBN: Category : Languages : en Pages :
Book Description
We analyze whether analysts sacrifice forecast accuracy for informativeness by examining: (1) the association between analysts' deviations from management guidance and earnings management; (2) the effect of the deviations on analyst forecast accuracy; and (3) the effect of the deviations on prices. The evidence indicates that analysts apparently deviate from management guidance to correct for perceived earnings management. Although the deviations reduce the analysts' forecast accuracy, they improve the informativeness of their earnings estimates. More specifically, they bring the analysts' estimates closer to the true (unmanaged) earnings number and reduce mispricing. An implicit assumption in the literature is that more accurate analyst forecasts (i.e., earnings estimates that are closer to the actual reported earnings) are better for investors, and that analysts' primary objective is to forecast the reported (managed) earnings number accurately. Our analysis suggests that this is not necessarily the case and that an inaccurate forecast can actually be more informative than an accurate one. Prior studies on analyst deviations from management guidance focus on analysts' incentives to provide earnings estimates that managers can beat. These studies implicitly assume that analysts side with management against the interests of their clients. Our analysis indicates that analysts could also deviate from management guidance to provide useful valuation information to their clients.
Author: Henock Louis Publisher: ISBN: Category : Languages : en Pages :
Book Description
We analyze whether analysts sacrifice forecast accuracy for informativeness by examining: (1) the association between analysts' deviations from management guidance and earnings management; (2) the effect of the deviations on analyst forecast accuracy; and (3) the effect of the deviations on prices. The evidence indicates that analysts apparently deviate from management guidance to correct for perceived earnings management. Although the deviations reduce the analysts' forecast accuracy, they improve the informativeness of their earnings estimates. More specifically, they bring the analysts' estimates closer to the true (unmanaged) earnings number and reduce mispricing. An implicit assumption in the literature is that more accurate analyst forecasts (i.e., earnings estimates that are closer to the actual reported earnings) are better for investors, and that analysts' primary objective is to forecast the reported (managed) earnings number accurately. Our analysis suggests that this is not necessarily the case and that an inaccurate forecast can actually be more informative than an accurate one. Prior studies on analyst deviations from management guidance focus on analysts' incentives to provide earnings estimates that managers can beat. These studies implicitly assume that analysts side with management against the interests of their clients. Our analysis indicates that analysts could also deviate from management guidance to provide useful valuation information to their clients.
Author: Patricia C O'Brien Publisher: Legare Street Press ISBN: 9781020791277 Category : Languages : en Pages : 0
Book Description
This book provides a detailed analysis of the accuracy of forecasts made by individual analysts across nine different industries. It explores the factors that contribute to forecast accuracy and provides insights into how these factors can be used to improve forecasting performance. The author, Patricia C. O'Brien, is a well-respected economist and her research has significant implications for businesses and investors who rely on forecasts in their decision-making processes. This work has been selected by scholars as being culturally important, and is part of the knowledge base of civilization as we know it. This work is in the "public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.
Author: Stewart Jones Publisher: Routledge ISBN: 1135107262 Category : Business & Economics Languages : en Pages : 559
Book Description
Financial accounting theory has numerous practical applications and policy implications, for instance, international accounting standard setters are increasingly relying on theoretical accounting concepts in the creation of new standards; and corporate regulators are increasingly turning to various conceptual frameworks of accounting to guide regulation and the interpretation of accounting practices. The global financial crisis has also led to a new found appreciation of the social, economic and political importance of accounting concepts generally and corporate financial reporting in particular. For instance, the fundamentals of capital market theory (i.e. market efficiency) and measurement theory (i.e. fair value) have received widespread public and regulatory attention. This comprehensive, authoritative volume provides a prestige reference work which offers students, academics, regulators and practitioners a valuable resource containing the current scholarship and practice in the established field of financial accounting theory.
Author: Patricia C. O'Brien Publisher: Forgotten Books ISBN: 9780332528458 Category : Mathematics Languages : en Pages : 36
Book Description
Excerpt from Forecast Accuracy of Individual Analysts: A Nine-Industry Study Current databases of analysts' forecasts of corporate earnings include predictions from thousands of individuals employed at hundreds of financial service institutions. The purpose of this paper is to analyze whether it is possible to distinguish forecasters with superior ability on the basis of ex Egg; forecast accuracy from panel data. 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: John Nowland Publisher: ISBN: Category : Languages : en Pages :
Book Description
Prior research has shown improvements in analysts' forecast accuracy around various events (e.g. new disclosure regulations or cross-listings), but these studies do not consider a change in the composition and ability of analysts providing forecasts over time. By studying foreign firms cross-listing on U.S. stock exchanges, we find that analyst composition changes by over 50 percent during the three-year period around cross-listing. We show that cross-listing is associated with a shift away from analysts who are less accurate forecasters and toward analysts who are more accurate forecasters. This shift in analyst composition accounts for a significant improvement of 9.5 percent in analyst forecast accuracy. In addition, we document that changes in both analyst ability and public information disclosure affect analyst forecast accuracy around cross-listing. Our results indicate that researchers should control for changes in analyst composition and ability when measuring the impact of specific events on analyst forecast accuracy.
Author: Phong Truong Publisher: ISBN: Category : Languages : en Pages : 52
Book Description
Facing limited attention constraints, financial analysts must strategically choose which information to pay attention to and which information to ignore when making earnings forecasts. I rely on rational inattention theory to develop and test hypotheses on factors that determine analyst attention and how analyst attention affects forecast accuracy. I construct a novel measure of attention that varies across stocks followed by the same analyst during the same fiscal period. I find that analyst attention is decreasing in the marginal cost of paying attention and that analysts allocate attention to firms with earnings that are difficult to forecast, suggesting that analysts suffer from a limited attention constraint. Importantly, I find that attentive analysts are more accurate, and the effect of attention is larger for inexperienced analysts and stocks with highly volatile earnings. Finally, I find that attentive analysts are less likely to revise forecasts upwards and are less optimistic even after controlling for firm information environment and analyst ability.
Author: Wei Hsu (Ph.D.) Publisher: ISBN: Category : Business forecasting Languages : en Pages : 84
Book Description
I examine how firm-specific private and public information affect analyst forecast revisions. I find that when managers easily beat (struggle to meet) the consensus forecasts in the previous quarter, financial analysts revise their earnings forecasts upward (downward). The revision magnitudes are higher when there is more private information. Similarly, I find that when managers provide upward (downward) earnings guidance, analysts revise their forecasts upward (downward) more when there is more private information. In contrast, the revision magnitudes are lower when there is more public information. Additionally, I find that the magnitudes of analysts' downward revisions increase with private information prior to the stock option grant dates. I attribute these results to the analysts' dependence on managers in gleaning relevant private information. The effect of private information is smaller for firms covered by star analysts, consistent with star analysts acting as sophisticated skeptics and being more confident in their forecasts than other analysts. Further, for well-governed firms, upward revisions for positive earnings surprises are smaller when there is more private information. This is consistent with stronger governance attenuating analysts' concerns about firms' earnings quality, which in turn increases their reliance on public earnings numbers and reduces their need to accommodate managers for private information. Finally, I find that private information is negatively associated with target price forecast accuracy, and positively associated with target price forecast optimism. These results suggest that greater information asymmetry adversely affects forecast accuracy and creates incentives for analysts to appease managers to access private information.
Author: Sami Keskek Publisher: ISBN: Category : Languages : en Pages : 48
Book Description
We posit and find an effect of disclosure and analyst reporting regulations implemented from 2000 through 2003 (including Regulation Fair Disclosure, the Sarbanes-Oxley Act, and the Global Settlement Act) on the importance of analyst and forecast characteristics for analyst forecast accuracy. Following the enactment of these regulations, more experienced analysts and All-Star analysts do not maintain their superior forecast accuracy, and analysts employed by large brokerage houses perform worse than other analysts. In addition, we find a decrease in the importance of analyst effort, the number of industries and firms followed, days elapsed since the last forecast, and forecast horizon. While the importance of bold upward forecast revisions does not change, bold downward revisions lose their relevance for forecast accuracy after 2003. Finally, we find an increase in the important of prior forecast accuracy. We find that the importance of these characteristics varies with the precision of publicly available information. Specifically, the decrease in the importance of most analyst and forecast characteristics and the increase in the importance of prior forecast accuracy are greater when the precision of publicly available information is low. Overall, our results suggest that the positive effects of experience, effort, brokerage house size, and All-Star status on forecast accuracy in the pre-regulation period were because of the information advantages that these analysts enjoyed (rather than their ability to generate private information). In contrast, our results suggest that prior forecast accuracy is related to analysts' ability to generate private information.
Author: Tanja Klettke Publisher: Springer Gabler ISBN: 9783658056353 Category : Business & Economics Languages : en Pages : 101
Book Description
Financial analysts provide information in their research reports and thereby help forming expectations of a firm’s future business performance. Thus, it is essential to recognize analysts who provide the most precise forecasts and the accounting literature identifies characteristics that help finding the most accurate analysts. Tanja Klettke detects new relationships and identifies two new determinants of earnings forecast accuracy. These new determinants are an analyst’s “general forecast effort” and the “number of supplementary forecasts”. Within two comprehensive empirical investigations she proves these measures’ power to explain accuracy differences. Tanja Klettke’s research helps investors and researchers to identify more accurate earnings forecasts.
Author: Patricia C. O'Brien Publisher: Nabu Press ISBN: 9781293452356 Category : Languages : en Pages : 40
Book Description
This is a reproduction of a book published before 1923. This book may have occasional imperfections such as missing or blurred pages, poor pictures, errant marks, etc. that were either part of the original artifact, or were introduced by the scanning process. We believe this work is culturally important, and despite the imperfections, have elected to bring it back into print as part of our continuing commitment to the preservation of printed works worldwide. We appreciate your understanding of the imperfections in the preservation process, and hope you enjoy this valuable book.
Author: Henock Louis
Author: Henock Louis
Author: Patricia C O'Brien
Author: Stewart Jones
Author: Patricia C. O'Brien
Author: John Nowland
Author: Phong Truong
Author: Wei Hsu (Ph.D.)
Author: Sami Keskek
Author: Tanja Klettke
Author: Patricia C. O'Brien