International evidence on the relative importance of the determinants of earnings forecast accuracy

Coën, Alain; Desfleurs, Aurélie; L’Her, Jean-François

doi:10.1016/j.jeconbus.2009.06.004

Cited by 21 publications

(23 citation statements)

References 75 publications

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“…Using some regression techniques, the study has determined that while there was a positive and meaningful relationship between earnings accuracy and investment discipline in terms of short/long term investment sentiment, there was no meaningful relationship between earnings accuracy and volume of trades. The results of our survey are consistent with findings earlier reported in the literature (Coën et al, 2009;Fang, 2009;Payne, 2008;Rees & Sivaramakrishnan, 2007). The results of this survey suggest TSE officials to build a better rules and regulations, which could help many investors.…”

Section: Resultssupporting

confidence: 92%

“…There are many studies in learning more about the effects of earnings quality on investors' decisions. Coën et al (2009) analyzed earnings forecasting errors made by financial analysts for 18 developed countries from 1990 to 2006. They applied the Heston-Rouwenhorst method to unravel country-, industry-, and firm-specific impacts as a source of variation in financial analysts' earnings forecast errors.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

http://www.growingscience.com/msl/Vol5/msl_2015_43.pdf

Ahmadi¹,

Baghani²

2015

10.5267/j.msl

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This paper presents an empirical investigation to study the effects of quality of earnings forecasts in predicting stock returns on 121 selected firms traded on Tehran Stock Exchange over the period [2009][2010][2011][2012][2013]. The study investigates the effects of three year means of earnings forecast accuracy on investors' investment decisions in terms of volume and time horizon, i.e. short term and long term investment sentiment. Using some regression analysis, the study has determined a positive and meaningful relationship between the quality of earnings forecast and investment time horizon. However, the study did not find any meaningful relationship between earnings forecast accuracy and volume of investment.Growing Science Ltd. All rights reserved. 5

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Section: Resultssupporting

confidence: 92%

Section: Introductionmentioning

confidence: 99%

http://www.growingscience.com/msl/Vol5/msl_2015_43.pdf

Ahmadi¹,

Baghani²

2015

10.5267/j.msl

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“…Therefore, in accordance with Duru and Reeb (2002), Herrmann et al (2008), Coen et al (2009) and Hovakimian and Saenyasiri (2010), analysts are more optimistic when firms are in trouble. As found by Saenyasiri (2010, 2014), the coefficient of M ON T H is significant and negative in all variants.…”

mentioning

confidence: 85%

“…Analysts are more prone to issuing optimistic forecasts about firms with negative earnings. Following Duru and Reeb (2002), Heflin et al (2003), Herrmann et al (2008), Coen et al (2009) and Hovakimian and Saenyasiri (2010), we construct two dummy variables. EP SN EGAT IV Ei, t equals 1 if the actual earnings of firm i at t are negative and 0 otherwise.…”

Section: Econometric Modelmentioning

confidence: 99%

Optimism bias in financial analysts' earnings forecasts: Do commissions sharing agreements reduce conflicts of interest?

Galanti

Vaubourg

2017

Economic Modelling

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Implemented in May 2007, the French rules governing commission-sharing agreements (CSAs) consist of unbundling brokerage and investment research fees. The goal of this paper is to analyze the effect of these rules on analysts' forecasts. Based on a sample of one-year-ahead earnings per share forecasts for 58 French firms during the period from 1999 to 2011, we conduct panel data regressions. We show that the analysts' optimistic bias declined significantly after CSA rules, which suggests that these rules are effective at curbing the conflicts of interest between brokerage activities and financial research. Our results are robust to the impact of the Global Settlement and the Market Abuse Directive.JEL Classification : G17, G24, G28

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“…Overall, these studies expects positive association between analyst forecast accuracy and analyst following. Loss and surprise are also included as control variable because previous studies find that type of earnings (profits or losses) and the variation of earnings (growth or fall or also termed as surprise) as two main determinants of forecast accuracy in the emerging market and developed countries (Coën, Desfleurs & L'Her 2009). Loss is dummy variable given as 1 if firm has a negative earnings and zero otherwise.…”

Section: Operationalization Of Variablesmentioning

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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International evidence on the relative importance of the determinants of earnings forecast accuracy

Cited by 21 publications

References 75 publications

http://www.growingscience.com/msl/Vol5/msl_2015_43.pdf

http://www.growingscience.com/msl/Vol5/msl_2015_43.pdf

Optimism bias in financial analysts' earnings forecasts: Do commissions sharing agreements reduce conflicts of interest?

Analyst Forecast Accuracy and Earnings Management

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