The effect of labor strikes on security analysts' forecast superiority and on the association between risk‐adjusted stock returns and unexpected earnings*

Abstract

Abstract. This paper empirically examines whether labor strikes affect the forecasting and infonnation content of quarterly earnings numbers. We address two issues regarding financial analyst forecast (FAF) superiority: whether FAF superiority increases when a strike occurs and if so, whether the increase in FAF superiority is sustained immediately after the strike ends. We also examine two issues regarding infonnation content: whether strikes affect the coefficient mapping unexpected earnings into stock prices and whether strikes affect the variance of stock price changes. We suggest that strikes affect both the forecasting and information content of quarterly earnings numbers.Resume. Cet article examine de fagon empidque si les greves des travailleurs influencent la pr6vision et le contenu informatif des resultats trimestriels. Nous abordons deux questions relatives k la superiorite des provisions d'analystes financiers (PAF): a savoir si la sup^dodtd des PAF s'accroit lorsqu'une greve se produit et, dans l'affirmative, si I'accroissement de cette superiorite se maintient immOdiatement apres la fin de la gr^ve. Nous ^tudions egalement deux questions relatives au contenu informatif: a savoir si les graves influencent le coefficient incorporant l'impact des b6nefices imprevus sur le cours des actions et si les greves affectent la vadance des fluctuations du cours des actions. Les greves affecteraient done a la fois la prevision et le contenu informatif des resultats tdmestdels.