Common Stock Offerings and Earnings Expectations: A Test of the Release of Unfavorable Information

The announcement impact of seasoned equity offerings on bondholder wealth

“…Additional studies have focused on financial variables other than announcement period returns to shed light on which of the hypotheses hold, but again the results have been mixed. Hansen and Crutchley (1990) document that abnormal earnings declines follow common stock offerings consistent with the cash flow signaling model while Brous (1992) and Jain (1992) report slight downward revisions in 1-year analysts' earnings forecasts following SEO announcements. Loughran and Ritter (1997) confirm significant declines in operating performance in the five years following SEOs with especially pronounced results for smaller firms.…”

The impact of strategic interaction on earnings expectations associated with corporate product strategies

“…We estimate revisions of short-term earnings forecasts following the methodology of Brous (1992) and Grullon and Michaely (2004) and revisions of long-term earnings growth Table 1 Construction of sample. The final sample consists of 1670 new product introductions (NPIs) by firms listed on either the NYSE or AMEX between 1987 and 2009 that meet data requirements.…”

“…Brous (1992) shows that the forecast revisions as defined in Eq. (1) might be subject to an optimism bias.…”

Stock split size, signaling and earnings management: Evidence from the Spanish market

“…However, the above simple revision of earnings forecasts could be a biased estimation of the true impact of splits, given that a monthly series of forecasts has problems of optimism and serial correlation bias (Brous, 1992). Accordingly, we calculate the abnormal or unexpected forecast revision as the difference between the actual forecast revision and the expected revision,…”

“…where AFR i,t is the abnormal earnings forecast revision for share i published in month t, FR i,t is the actual (realized) forecast revision for share i in month t, and E(FR i,t ) is the expected forecast revision for firm i in month t, calculated with the expectations model proposed by Brous (1992) as,…”