Financial Analysts' Forecast Revisions and Managers' Reporting Behavior

2008 ◽  
Author(s):  
Anne Beyer
Keyword(s):  
Financial Analysts ◽  
Reporting Behavior ◽  
Forecast Revisions

Do Supplementary Sales Forecasts Increase the Credibility of Financial Analysts’ Earnings Forecasts?

2010 ◽  
Vol 85 (6) ◽  
pp. 2047-2074 ◽  
Author(s):  
Edmund C. Keung
Keyword(s):  
Financial Analysts ◽  
Earnings Forecasts ◽  
Earnings Persistence ◽  
Earnings Forecast ◽  
Time Effects ◽  
Forecast Revisions ◽  
Sales Forecast ◽  
Sales Forecasts ◽  
Ex Post ◽  
Incremental Information

ABSTRACT: This study examines whether the market reacts more strongly to earnings forecast revisions when financial analysts supplement their earnings forecasts with sales forecasts. I find that earnings forecast revisions supplemented with sales forecast revisions have a greater impact on security prices than do stand-alone earnings forecast revisions, controlling for the incremental information content in sales forecasts. Supplemented earnings forecasts are more accurate ex post, controlling for other individual analyst characteristics. Results are robust to controlling for earnings persistence and time effects. Taken as a whole, financial analysts are more likely to supplement their earnings forecasts with sales forecasts when they have better information. Supplementary sales forecasts appear to lend credibility to earnings forecasts because financial analysts provide sales forecasts when they are more informed.

Disaggregated Capital Expenditures

2019 ◽  
Vol 33 (4) ◽  
pp. 77-93 ◽  
Author(s):  
Brooke D. Beyer ◽  
Donald R. Herrmann ◽  
Eric T. Rapley
Keyword(s):  
Financial Performance ◽  
Financial Analysts ◽  
Financial Statement ◽  
Capital Expenditures ◽  
Analyst Forecast ◽  
Voluntary Disclosures ◽  
Estimation Errors ◽  
Forecast Revisions ◽  
Earnings Per Share ◽  
Total Capital

SYNOPSIS Financial analysts and accounting regulators encourage companies to disclose the disaggregation of total capital expenditures (CAPX) into the portion for sustaining current performance (maintenance CAPX [MCAPX]) and the portion for pursuing additional opportunities (growth CAPX [GCAPX]). Using a hand-collected sample of voluntary disclosures, we document that traditional estimates of disaggregated CAPX components, using currently required financial statement disclosures, are inadequate proxies for actual (disclosed) values of MCAPX and GCAPX. Specifically, we find that estimation errors for disaggregated variables are associated with future financial performance (i.e., changes in sales and earnings), suggesting that disaggregated disclosure information is potentially useful in forecasting. We also find that these estimation errors are associated with analyst forecast revisions of sales and earnings per share, consistent with analysts incorporating disaggregated CAPX information into their forecasts. Our results provide evidence that disaggregated CAPX disclosures are superior to currently required aggregate CAPX disclosure for forecasting firms' financial performance.

The Impact of Seasonal Affective Disorder on Financial Analysts

2017 ◽  
Vol 93 (4) ◽  
pp. 309-333 ◽  
Author(s):  
Kin Lo ◽  
Serena Shuo Wu
Keyword(s):  
Stock Returns ◽  
Affective Disorder ◽  
Seasonal Affective Disorder ◽  
Seasonal Pattern ◽  
Financial Analysts ◽  
Analyst Forecasts ◽  
Equity Returns ◽  
Data Availability ◽  
Forecast Revisions ◽  
The Impact

ABSTRACT We examine the impact of Seasonal Affective Disorder (SAD) on financial analysts. We hypothesize and find that analysts are more pessimistic, less precise, and more asymmetric in their boldness in the fall, as indicated by their forecasts of quarterly earnings. The effects are apparent in all forecast horizons analyzed and robust across multiple specifications. Importantly, pessimism in fall forecast revisions shows analyst-specific persistence, providing a strong indication that the effect is a result of SAD rather than other coincident factors. We also find evidence of a reversal in pessimism in the spring. Additional analyses show that analyst forecasts exhibit less seasonality than equity returns, and that the presence of analyst forecasts in the fall is associated with attenuation in the seasonal pattern in stock returns. Overall, the evidence suggests that SAD affects both financial analysts and equity investors, but the effect on the latter is stronger. JEL Classifications: G11; G12; G14; G41; M41. Data Availability: Data are available from public sources cited in the text.

The Reaction of Financial Analysts to Enterprise Resource Planning (ERP) Implementation Plans (Retracted)

2002 ◽  
Vol 16 (1) ◽  
pp. 31-40 ◽  
Author(s):  
James E. Hunton ◽  
Ruth Ann McEwen ◽  
Benson Wier
Keyword(s):  
Enterprise Resource Planning ◽  
Firm Value ◽  
Financial Analysts ◽  
Abnormal Returns ◽  
Earnings Forecasts ◽  
Resource Planning ◽  
Erp Implementation ◽  
Forecast Revisions ◽  
Cumulative Abnormal Returns ◽  
Implementation Plans

This study investigates the extent to which investors believe that enterprise resource planning (ERP) systems enhance firm value by examining changes in financial analysts' earnings predictions before and after they receive an announcement that a firm plans to implement an ERP system. A total of 63 analysts participated in a two (firm size: small and large) by two (firm health: unhealthy and healthy) randomized between-subjects design. The ERP announcement represented a within-subjects manipulation. The analysts' overall reaction to ERP implementation plans was positive, as mean post-announcement earnings forecasts were significantly higher than mean pre-announcement forecasts. Additionally, as expected, mean earnings forecast revisions in the small/healthy and large/unhealthy firm conditions were significantly greater than mean forecast revisions in the small/unhealthy firm condition. Experimental results from the current study support archival findings reported by Hayes et al. (2001), who explored the same research questions, among others, by examining cumulative abnormal returns surrounding ERP announcements. Triangulation studies of this nature using multimethods (e.g., behavioral vs. archival) and complementary criterion variables (e.g., earnings forecasts vs. cumulative abnormal returns) are important to social scientists, as they provide insight into the reliability, consistency, and validity (both internal and ecological) of proposed theoretical relationships (Boyd et al. 1993; Flick 1992; Libby et al. 2002).

scholarly journals Do analysts leak information to preferred customers?

2009 ◽  
Vol 6 (4) ◽  
pp. 357-369
Author(s):  
Anders Ekholm ◽  
Alexander von Nandelstadh
Keyword(s):  
Research Question ◽  
Financial Analysts ◽  
Earnings Forecast ◽  
Trading Behavior ◽  
Data Set ◽  
Forecast Revisions ◽  
Future Earnings ◽  
Proprietary Information ◽  
Analyst Earnings

Our research question is whether financial analysts leak proprietary information to their preferred customers by warning them of future earnings forecast revisions. We explore this question by monitoring investors’ trading behavior during the weeks prior to analyst earnings forecast revisions using a unique stock transactions data set from Finland. We do not find evidence of large investors systematically being warned of future earnings forecast revisions. However, our results indicate that the very largest investors show trading behavior partly consistent with being informed about future earnings forecast revisions.

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