Management Earnings Forecasts and Value of Analyst Forecast Revisions

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This study examines the stock-price reactions to analyst forecast revisions around earnings announcements to test whether preannouncement 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.
Publisher
INFORMS
Issue Date
2015-07
Language
English
Article Type
Article
Keywords

RECOMMENDATION REVISIONS; INFORMATION-CONTENT; SECURITY ANALYSTS; FAIR DISCLOSURE; ANNOUNCEMENTS; BEHAVIOR; EXPECTATIONS; PERFORMANCE; INCENTIVES; ACCURACY

Citation

MANAGEMENT SCIENCE, v.61, no.7, pp.1663 - 1683

ISSN
0025-1909
DOI
10.1287/mnsc.2014.1920
URI
http://hdl.handle.net/10203/244353
Appears in Collection
MT-Journal Papers(저널논문)
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