Determinants of analysts’ revenue forecast accuracy

Lorenz, Tanja; Homburg, Carsten

doi:10.1007/s11156-017-0675-4

Cited by 9 publications

(6 citation statements)

References 38 publications

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“…The data has been collected from Institutional Brokers Estimate System (IBES) annual update.Control Variables:- Analyst Characteristics: Various analyst characteristics like experience, forecast horizon and forecast frequency significantly impact forecast accuracy (Lorenz and Homburg, 2018). We, thus, control the following variables:Experience: It is the number of years since the analyst i started giving forecasts until the present forecast.Coverage: It refers to the number of firms an analyst i has been covering till the year t.Horizon: It is the natural logarithm of the number of days from the forecast issue date to the actual earnings announcement date.…”

Section: Sample Data and Methodologymentioning

confidence: 99%

“…Control Variables:- Analyst Characteristics: Various analyst characteristics like experience, forecast horizon and forecast frequency significantly impact forecast accuracy (Lorenz and Homburg, 2018). We, thus, control the following variables:…”

Section: Sample Data and Methodologymentioning

confidence: 99%

“…It may differ based on firm and analyst factors. The age of the firm and the experience of the analysts are crucial factors in determining the strength of the relationship between firm managers and analysts, thus, impacting optimism (Hamers et al, 2016;Lorenz and Homburg, 2018). We expect that if the analysts depend on managers for information and intend to earn more brokerage during uncertain periods, the more experienced analysts shall favor optimistic forecasts and recommendations to maintain their relationship.…”

Section: Analyst Optimism and Uncertaintymentioning

confidence: 99%

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Analyst optimism, uncertainty and regulation: evidence from the Indian market

Singla

Chakraborty

Singh

2023

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PurposeThe study examines the effect of increased Economic Policy uncertainty on analyst optimism in the Indian market. The study also explores whether the SEBI Research Analyst Regulation, 2014, has effectively contained the optimistic nature of analysts.Design/methodology/approachThe study is based on firms in the Indian market. The sample period is 2003–2020. It runs a linear panel regression to measure the impact of Economic Policy uncertainty on the optimism level of analysts' forecasts and recommendations, controlling for firm fixed effects. Further, the impact of the SEBI Research Analyst Regulation, 2014, has been assessed with the help of the difference-in-difference approach.FindingsThe Economic Policy uncertainty is significantly and positively related to the analyst optimism, reflected in the forecast bias and recommendation in the Indian context. The experience of analysts and the age of the firm positively drive optimism. However, introducing the Research Analyst Regulation by SEBI led to a decline in analyst optimism. The regulation decoupled the analysts' compensation from brokerage service transactions. Thus, the results suggest that the regulation has effectively curbed the incentive to produce optimistic output.Originality/valueThis is the first study in the Indian market to assess the impact of uncertainty on analyst output. It also investigates the effectiveness of the first analyst-specific regulation in India, i.e. The Research Analyst Regulation, 2014.

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Section: Sample Data and Methodologymentioning

confidence: 99%

Section: Sample Data and Methodologymentioning

confidence: 99%

Section: Analyst Optimism and Uncertaintymentioning

confidence: 99%

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Analyst optimism, uncertainty and regulation: evidence from the Indian market

Singla

Chakraborty

Singh

2023

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“…Hasılat ve gelir kalemleri şirket performansı üzerine gerçekleştirilecek birçok analizin temel dayanağını oluşturmakta ve dikkate alınmaktadır. Lorenz & Homburg (2018) da hasılatın yatırımcılar tarafından tahminleme çalışmalarında en sık kullanılan analiz unsurlarından biri olduğunu belirtmektedir.…”

Section: Standartlar çErçevesi̇nden Geli̇r Ve Hasilat Kavramlariunclassified

TFRS 15 Case Study on Principal/Agent Positioning: Turkcell and Gezinomi

OKAN GÖKTEN,

ÖZDOĞAN,

GÖKTEN

2023

Selçuk Üniversitesi Sosyal Bilimler Meslek Yüksekokulu Dergisi

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Bu çalışma ile Borsa İstanbul’da (BIST) faaliyet gösteren ve iş modeli içerisinde acentelik veya başka bir işletmenin ürün veya hizmetini müşterilerine ulaştırmasında aracılık rolü üstlenerek gelir elde eden işletmelerin TFRS 15’e göre asıl/vekil değerlendirmesinin işletmelerin hasılatın raporlanması üzerindeki etkisini araştırmak amaçlanmıştır. Araştırmada nitel araştırma yöntemlerinden içerik analizi modeli kullanılmıştır. BIST’te faaliyet gösteren Turkcell ve Gezinomi işletmelerinin 2018 – 2022 yılları arası faaliyet raporlarından elde edilen hasılat kalemi ve ayrıntısı verisi kullanılarak TFRS 15’e göre işletmelerin hasılat kalemini kaydederken kendilerini “asıl/vekil” olarak nasıl konumlandırdıkları özelinde analiz edilmiştir. Bu çerçevede işletmelerin faaliyet raporlarından elde edilen bilgiler işletmelerin hasılatı kaydederken hangi kalemleri brüt, hangi kalemleri net olarak hasılata ekledikleri ayrıntısını göstermemektedir. Bu durum işletmelerin finansal açıklamaları çerçevesinde karar alan paydaşların, işletmelerin gerçek finansal performanslarını ölçmesi ve sektörel anlamda karşılaştırma yapmasını zorlaştırarak işletme üzerindeki şüpheleri artırmaktadır.

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“…Empirical evidences suggest that forecast accuracy is associated with analyst characteristics (Bolliger 2004;Jacob, Lys & Neale 1999) as well as firm-level characteristics (Rogers & Stocken 2005). Analyst characteristics such as forecasting experience, forecast frequency, forecast portfolio, reputation, earnings forecast issuance, forecast boldness, and analysts' prior performance in forecasting revenues and earnings are found to determine revenue forecast accuracy (Lorenz & Homburg 2018). Firm-level characteristics that have been found to be associated with forecast accuracy are the effectiveness of firm-level governance mechanisms (Abernathy, Hermann, Kang & Krishnan 2013) and quality of the firm's information environment including disclosure and earnings quality (Beyer et al 2010;Jiao, Koning, Mertens & Roosenboom 2012).…”

Section: Literature Review and Hypotheses Development Earnings Managementioning

confidence: 99%

Analyst Forecast Accuracy and Earnings Management

Embong

Hosseini²

2018

AJAG

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This paper investigates the reciprocal or endogenous relationship between earnings management and analyst forecast accuracy. Earnings number is one of the most referred information especially in relation to investment decision-making. Financial analysts use earnings number and its trend in coming up with their forecast. The quality of earnings reported hence may affect the accuracy of forecast made by analysts. Quality of reported earnings is often indicated by earnings management. One of the motivations to manage earnings is to meet or beat analyst forecasts. If analysts failed to account for earnings management, it is possible that earnings manipulation in the previous year may mislead analysts and affect forecast accuracy for current and/or future years. Thus, relationship between earnings management and forecast accuracy could be endogenous or reciprocal, where managers react upon analysts' forecasts and analysts use reported earnings to make forecast. Previous research on this area assume earnings management and forecast accuracy as exogenous variables. This study on the other hand incorporates the reciprocal relationship between analyst forecast accuracy and earnings management in examining whether analysts can detect earnings management. The relationship between earnings management and analyst forecast accuracy of 110 firms listed on Main board of Bursa Malaysia from 2007 to 2012 is analyzed using dynamic panel system Generalized Method of Moments (GMM) estimator. The year 2007 to 2012 is chosen because this represents the period of convergence from MASB to MFRS. Result indicates that meeting or beating the forecast is one of the incentives for earnings management although not a strong incentive. On the other hand, earnings management significantly influence forecast accuracy, indicating that somehow, analysts trust the reported earnings. This study adds to the literature by addressing the possible endogenous and dynamic relationship between earnings management and analyst forecast accuracy.

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Determinants of analysts’ revenue forecast accuracy

Cited by 9 publications

References 38 publications

Analyst optimism, uncertainty and regulation: evidence from the Indian market

Analyst optimism, uncertainty and regulation: evidence from the Indian market

TFRS 15 Case Study on Principal/Agent Positioning: Turkcell and Gezinomi

Analyst Forecast Accuracy and Earnings Management

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