Analysts' Decisions As Products of a Multi-Task Environment

Francis, Jennifer; Philbrick, Donna R.

doi:10.2307/2491271

Cited by 645 publications

(350 citation statements)

References 8 publications

Supporting

Mentioning

319

Contrasting

Unclassified

Order By: Relevance

“…(Lin and McNichols 1998;Michaely and Womack 1999). Under the conflict of interest hypothesis, analysts may have to give positive recommendations to compete for future investment banking business, to generate trading commissions (Hayes 1998;Irvine 2004) or to maintain management relations and their access to the information (Francis and Philbrick 1993;Das, Levine, and Sivaramakrishnan 1998).…”

Section: Recommendations Have Investment Valuementioning

confidence: 99%

Long-run performance of IPOs and the role of financial analysts: some French evidence

Boissin¹,

Sentis²

2012

The European Journal of Finance

View full text Add to dashboard Cite

Section: Recommendations Have Investment Valuementioning

confidence: 99%

Long-run performance of IPOs and the role of financial analysts: some French evidence

Boissin¹,

Sentis²

2012

The European Journal of Finance

View full text Add to dashboard Cite

“…First, analysts' incentive to improve report-writing may differ according to the positive or negative signals intended to be communicated by the report. Francis and Philbrick (1993) argued that analysts issue optimistic earnings forecasts to maintain good relations with managements. O'Brien et al (2005) provided empirical evidence that affiliated analysts are more likely to issue reports carrying good-news.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Analyst Report Readability

Hsieh

Hui

2011

SSRN Journal

View full text Add to dashboard Cite

This paper studies three research questions regarding analyst forecast reports' readability: (1) whether readability of analyst reports affects investment decisions; (2) whether the way analysts explain the reasoning of their research (i.e. how they tell their story) relates to accuracy of earnings forecasts; and (3) whether readability of analyst reports relates to the underlying characteristics of the analysts. We find that the market reacts more favorably to reports that revise earnings forecasts upward and are easier to read. Consistent with this finding, upward revisions have smaller forecast errors in relatively more readable reports. We also find that security analysts with longer experience, who follow more firms, tend to issue more readable reports. Upward revisions issued by analysts from smaller brokerage houses and analysts having better records of forecast accuracy are more readable. Reports are also more readable when they are issued immediately after firms' public disclosures or management forecasts. Overall, readability complements the information of reports containing upward revisions, and indicates better forecast accuracy. This is the Pre-Published Version 3

show abstract

“…Also, several studies show evidence that analysts may produce optimistic forecasts to receive favorable treatment from the management of the companies they follow. Francis and Philbrick (1993) posit that the analysts, who operate in a multi-task environment, produce optimistic forecasts to develop or maintain management relations. Das et al (1998) argue that for firms with less predictable earnings, analysts have more influence on the market's expectations and may produce more optimistic forecasts to obtain informational benefits from management.…”

Section: Serial Correlation In Individual Analysts' Forecast Errors Amentioning

confidence: 99%

Properties of Individual Analysts’ Earnings Forecasts for the Turkish Stock Market

Aydo¹,

Sarao²

2005

boun

View full text Add to dashboard Cite

We examine the properties of individual analysts' forecasts of annual earnings for Turkish companies. Using a sample obtained from the Institutional Brokers Estimate System (I/B/E/S) database of earnings forecasts, we measure individual analysts' forecast errors and relative optimism, and test for serial correlation in these measures. We also compare the forecast accuracy of analysts working for Turkish brokerage firms to the forecast accuracy of those employed by non-Turkish firms. An important contribution of this paper is that it is the first study to focus on the earnings forecasts of Turkish companies at the individual analyst level.The past decade has seen substantial growth in emerging markets as investors seeking high returns and potential diversification benefits have channeled their funds into assets in these markets. Turkey, which is identified as a big emerging market by the U.S. Department of Treasury (see Business America, 1994), has enjoyed substantial growth in its equity market since the inception of the Istanbul Stock Exchange (ISE) in 1986. Sustained growth in the Turkish equity market and its integration with the world capital markets require the availability of timely and accurate information on company performance. Security analysts' forecasts of company earnings are an integral part of the information set for equity investors. The role of analysts' earnings forecasts as a representative of the market's earnings expectations is well documented in the literature (see Brown, 1978;Fried and Givoly, 1982;Rendleman et al., 1982;and Brown et al., 1987). Also, analyst following is a good indicator of interest in and potential growth of an equity market. Figure 1 shows the number of Turkish companies for which analysts reported earnings forecasts to the Institutional Brokers Estimate System (I/B/E/S) for each year during the 1994-2001 period. As is apparent in Figure 1, there was a significant increase in the number of Turkish companies followed by analysts, which can be interpreted as a sign of increased interest in the Turkish equity market.There is a rich body of research that focuses on the characteristics of individual analysts' earnings forecasts. Tamura (2002) studies the properties of individual analyst forecasts and finds that an analyst's forecast tends to be influenced by her personality. Cooper et al., (2001) rank individual analyst forecasts and conclude that lead analyst forecasts tend to impact the markets more than the follower analyst forecasts do. On the international analyst forecast side, Firth and Gift (1999) compare the precision of consensus analyst forecasts across countries and find that estimates are more precise for eight countries compared to the U.S. consensus estimates. Allen et al., (1997) find differences in forecast errors between Pacific Basin markets and more developed capital markets. Ang and Ma (2001) document that analysts failed to anticipate the Asian financial crisis. De Bondt and Forbes (1999) find evidence for herding behavior among U.K. analysts....

show abstract

Analysts' Decisions As Products of a Multi-Task Environment

Cited by 645 publications

References 8 publications

Long-run performance of IPOs and the role of financial analysts: some French evidence

Long-run performance of IPOs and the role of financial analysts: some French evidence

Analyst Report Readability

Properties of Individual Analysts’ Earnings Forecasts for the Turkish Stock Market

Contact Info

Product

Resources

About