Analyst information production and the timing of annual earnings forecasts

Keskek, Sami; Tse, Senyo Y.; Tucker, Jennifer Wu

doi:10.1007/s11142-014-9278-7

Cited by 46 publications

(32 citation statements)

References 29 publications

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“…Consistent with forecasts being less-informed, we find that when analysts are in polluted cities during an earnings announcement, they are less likely to issue bold (especially, negatively bold) forecasts. Forecast boldness reflects the extent to which analysts map new information into revised forecasts (Clement and Tse 2005;Gleason and Lee 2003;Hong et al 2000; Keskek et al 2014). Our results are thus consistent with analysts reducing the extent to which they incorporate new information into their forecasts when they are forecasting under polluted conditions.…”

Section: Introductionsupporting

confidence: 75%

“…Consistent with Truman (1994), Gleason and Lee (2003), Clement and Tse (2005) and Keskek et al (2014), we argue that revised analyst forecasts, benchmarked against their own prior forecasts and peer analyst prior forecast consensus, reflect analyst information production. Gleason and Lee (2003) provide evidence that deviation from the prevailing consensus by an individual analyst (i.e.…”

Section: Channels Underlying Pm Pollution's Effect On Analyst Forecastssupporting

confidence: 63%

“…We extend Dong et al (2019) by examining the impact of air pollution on additional dimensions of analyst information production. First, we focus on analyst forecast revisions, which proxy for analyst information production (Clement and Tse 2005;Keskek et al 2014), rather than on forecast bias. Second, whereas Dong et al (2019) examine a window of 15 days, we employ a 2-day time period.…”

Section: Introductionmentioning

confidence: 99%

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Air pollution and analyst information production

Luo

Soderstrom

2020

Journal of Corporate Finance

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Recent studies investigate the impact of air pollution on labor productivity. We extend this literature by showing that air pollution negatively affects equity analysts in their role as providers of information for capital markets. Compared to analysts experiencing clean air, analysts exposed to particulate matter (PM) pollution are less likely to issue timely forecasts or improve their forecast accuracy. Investigating the mechanism behind this result, we find that air pollution deters analysts from producing information. When analysts are exposed to air pollution, they are less likely to provide bold (especially, negatively bold) forecasts, which is consistent with analysts mapping new information into revised forecasts to a lesser extent. We also find evidence that market pricing is less sensitive to analyst forecast revisions issued by analysts exposed to air pollution. Our results are robust to controlling for firm/analyst and time fixed effects, as well as additional specifications employing difference-indifferences designs and placebo tests.

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Section: Introductionsupporting

confidence: 75%

Section: Channels Underlying Pm Pollution's Effect On Analyst Forecastssupporting

confidence: 63%

Section: Introductionmentioning

confidence: 99%

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Air pollution and analyst information production

Luo

Soderstrom

2020

Journal of Corporate Finance

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“…In the first test, we examine whether analysts issue or revise earnings forecasts right after firms provide mandatory forecasts. In US capital markets, the majority of analyst earnings forecasts during a year are issued within three trading days after earnings announcement events (Keskek, Tse, & Tucker, ), suggesting that these events are especially informative. For our Chinese sample firms, we collect analyst forecasts of year t ’s earnings issued within five calendar days after the earnings report dates for year t −1 and the fiscal quarters Q1–Q3 of year t .…”

Section: The Usefulness Of Mandatory Forecastsmentioning

confidence: 99%

The effects of a mixed approach toward management earnings forecasts: Evidence from China

Huang

Tse

et al. 2018

Business Fin & Account

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Chinese regulators mandate management earnings forecasts when managers' earnings expectations meet bright-line thresholds and allow voluntary forecasts in other circumstances. We examine the effects of this mixed approach. We find that Chinese mandatory forecasts have significant information content. Moreover, we observe a learning effect: mandatory forecasts appear to stimulate voluntary forecasts in subsequent periods as managers become familiar with the forecasting and disclosing procedures through forced experience. We find one negative consequence of the mixed approach, however: managers appear to manipulate earnings to avoid the forecast threshold of large earnings decreases. Overall, we document the pros and cons of a mixed approach toward management earnings forecasts in a major emerging market.

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“…Our paper fills this gap by examining how an expert can manipulate his reputation by strategically choosing the timing of his prediction. Keskek, Tse, and Tucker [2014] provide evidence from the field that competent experts tend to make their reports earlier -so earlier reports are more informative and are perceived more favorably, -and explain this through preemption mechanisms. We show that competition is not necessary for this phenomenon to arise.…”

Section: Introductionmentioning

confidence: 90%

Timing of Predictions in Dynamic Cheap Talk: Experts vs. Quacks

Smirnov

Starkov

2019

SSRN Journal

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The paper studies a dynamic communication game in the presence of adverse selection and career concerns. A forecaster of privately known competence, who cares about his reputation, chooses the timing of the forecast regarding the outcome of some future event. We find that in all equilibria in a sufficiently general class earlier reports are more credible. Further, any report hurts the forecaster's reputation in the short run, with later reports incurring larger penalties. The reputation of a silent forecaster, on the other hand, gradually improves over time.

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Analyst information production and the timing of annual earnings forecasts

Cited by 46 publications

References 29 publications

Air pollution and analyst information production

Air pollution and analyst information production

The effects of a mixed approach toward management earnings forecasts: Evidence from China

Timing of Predictions in Dynamic Cheap Talk: Experts vs. Quacks

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