Analysts’ general forecast effort as determinant of earnings forecast accuracy

Klettke, Tanja

doi:10.1007/978-3-658-05634-6_2

Cited by 1 publication

(1 citation statement)

References 0 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This focus has begun to shift to a consideration of the decision contexts in which analysts make their forecasts based on the economic incentives. However, research has also demonstrated that analysts’ forecasts are not purely based on information but also on other factors such as good corporate their career concerns or reputation concerns (Azzi and Bird, 2005; Hong et al , 2000; Hong and Kubik, 2003; Klettle, 2014; Rahman et al , 2019). These studies suggest that the objectives of analysts are consistent with that of forecast accuracy.…”

Section: Introductionmentioning

confidence: 99%

Analysts’ forecasts between last consensus and earning announcement date

Zhang

Gay

2020

JFRA

View full text Add to dashboard Cite

Purpose Thomson financial database reports a monthly consensus measure of analysts’ forecasts in the third week of every month, and firms’ earnings announcement dates are usually different from the last consensus calculation date. Thus, there is a gap between the last consensus calculation date and the earnings announcement date of firms. This study aims to address the question: “Do analysts issue forecasts that are slightly higher than the consensus number to increase the accuracy of their forecasts?” Design/methodology/approach This study is based on a sample of 91,172 quarterly earnings forecasts of various firms from 1990 to 2007 made between the last consensus calculation date and quarterly earnings announcement date. Descriptive statistics and statistical tests were used to analyze the data. Findings The findings propose that contrary to expectation, analysts’ forecasts between the last consensus calculation date and earnings announcement date are smaller than the consensus number. Also, the forecasts made between the last consensus and earnings announcement date is not as informative as forecasts made at other times as they could merely reflect the analysts’ herding behavior resulting from their career concerns. Originality/value This study provides a link between the literature that studies firms’ meet or beat analysts’ earnings phenomenon and analysts’ forecast decision-making context. This study also provides useful implications for the literature on the information content of analysts’ forecasts.

show abstract