Concurrent Earnings Announcements and Analysts' Information Production

Driskill, Matthew; Kirk, Marcus; Tucker, Jennifer Wu

doi:10.2308/accr-52489

Cited by 98 publications

(48 citation statements)

References 50 publications

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“…Third, we enrich the research on analysts' decision fatigue. Prior studies have provided evidence of analysts' decision fatigue, and find that decision fatigue leads to less accurate and timely earnings forecasts and stock ratings [31,32]. We test how investors respond to analysts' decision fatigue, and the results show that investors rely less on rating deviations to allocate their attention to amateur analysis when the analysis is issued by a busy analyst.…”

Section: Introductionmentioning

confidence: 88%

Investors’ Attention Allocation to Stock Analysis: The Role of Rating Deviation

Yu¹,

Ye²,

Pu³

2022

Proceedings of the Annual Hawaii International Conference on System Sciences

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Stock analysis is important for investors. However, little is known about how investors allocate their attention to different analyses. In the last two decades, online investment communities (OICs) have proliferated. In this study, we use investors ' online activities (i.e., comment and like) and amateur stock analysis in Seeking Alpha to explore how investors allocate their attention among different analyses by examining the effects of stock rating deviation on their attention. We measure the stock rating deviation of one analysis by comparing its stock rating with the previous rating for the same stock. The results show that the analyses with stock ratings that are more deviated from the existing ratings tend to receive more comments and likes from investors, indicating that rating deviation from the consensus positively impacts investor attention to stock analysis. In addition, the deviation's negativity and the stock volatility strengthen the impact of rating deviation on investor attention. However, analysts' busyness status negatively moderates this impact.

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Section: Introductionmentioning

confidence: 88%

Investors’ Attention Allocation to Stock Analysis: The Role of Rating Deviation

Yu¹,

Ye²,

Pu³

2022

Proceedings of the Annual Hawaii International Conference on System Sciences

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“…Our third measure of cognitive constraints incorporates the notion of analyst busyness due to the clustering of EAs. Driskill et al (2020) show that analysts' constraints due to EA clustering limit their ability to process information from EAs and slow down their response. For example, Driskill et al show that analysts with three or more concurrent announcements delay their forecasts by three times as much as those with one concurrent announcement.…”

Section: Cognitive Constraintsmentioning

confidence: 99%

Bundled Earnings Guidance and Analysts' Forecast Revisions*

Hsu

Wang

2021

Contemporary Accting Res

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Bundling managerial earnings guidance with quarterly earnings announcements (EAs) has become an increasingly common practice. This study investigates the impact of bundled guidance on analysts' forecast revisions. Our findings indicate that analysts respond more to bundled guidance than non-bundled guidance. This effect increases with analysts' time pressure and cognitive constraints around the EA. Analysts' revisions also incorporate more of the bundled management guidance when accompanied by additional information, such as conference calls. We further find that analysts revise their forecasts more quickly following bundled guidance than non-bundled guidance. Together, these findings are consistent with the notion that analysts place more weight on bundled guidance than on non-bundled guidance in their forecast revisions as bundled guidance facilities analysts' timely forecast revisions following EAs. Finally, we find that analysts' forecast revisions following bundled guidance generate significant market reactions. Our findings enhance our understanding of analysts' information processing and shed light on why bundling can be an effective guidance strategy.

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“…Analysts are affected as well. They exhibit a lack of attention when writing reports (Choi and Gupta-Mukherjee, 2016) and a feature of less timeliness if many stocks are publicizing their earnings on the same day (Driskill et al, 2020). By realizing the existence of limited attention, firms may strategically schedule their announcements.…”

Section: Limited Attention Theorymentioning

confidence: 99%

Limited Attention and Post-Earnings Announcement Drift: Evidence From China’s Stock Market

Chen

Gao

Liu

2021

IJEFI

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This paper utilizes Chinese stock data to provide further evidence on the power of limited attention theory in explaining post-earnings announcement drift. As retail investors prevail in China and they are easily distracted by market swings, we should expect severe attention problems, resulting in larger underreaction to firm information and higher sensitivity to market movement, i.e., the so-called "market movement effect". After accounting for special arrangements such as preannouncements and earnings previews, we confirm a strong presence of this effect in Chinese stock market, given the "Friday effect" and "announcement concentration effect" being controlled for. Moreover, the effect is asymmetric in market up and down, and becomes more pronounced for small-cap and value stocks.

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Concurrent Earnings Announcements and Analysts' Information Production

Cited by 98 publications

References 50 publications

Investors’ Attention Allocation to Stock Analysis: The Role of Rating Deviation

Investors’ Attention Allocation to Stock Analysis: The Role of Rating Deviation

Bundled Earnings Guidance and Analysts' Forecast Revisions*

Limited Attention and Post-Earnings Announcement Drift: Evidence From China’s Stock Market

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