Incorporating Quarterly Earnings Information into Cross-Sectional Earnings Forecast Models

2017 ◽  
Author(s):  
Dieter Hess ◽  
Tobias Lorsbach
Keyword(s):  
Earnings Forecast ◽  
Cross Sectional ◽  
Quarterly Earnings ◽  
Earnings Information ◽  
Forecast Models

Predictability of Analyst Earnings Forecast Errors and Institutional and Individual Investors’ Reactions to Earnings News

2020 ◽  
pp. 0148558X2093933
Author(s):  
Nilhabra Bhattacharya ◽  
Per Olsson ◽  
Hyungshin Park
Keyword(s):  
Institutional Investors ◽  
Forecast Error ◽  
Individual Investors ◽  
Earnings Forecast ◽  
Forecast Errors ◽  
Financial Reports ◽  
Earnings Announcement ◽  
Quarterly Earnings ◽  
Earnings Information ◽  
Analyst Earnings

We decompose analysts’ earnings forecast error into predictable and unpredictable components and investigate individual vis-à-vis institutional investors’ reactions to each of these components. We find that in the immediate post-earnings announcement window, only individuals under-react to the predictable component, while both individuals and institutions under-react to the unpredictable component. The price drift in this window is driven primarily by investors’ under-reaction to the unpredictable component. This drift remains highly significant in larger firms and intensifies in firms with complex financial reports, suggesting that it likely represents the slow and noisy process of price discovery. Around the next quarterly earnings announcement, only individuals under-react to the previous quarter’s predictable component, and this fixation drives the entire price drift in this window. This drift disappears in larger firms and gets exacerbated in firms with greater forecast error autocorrelations, suggesting that it is likely attributable to incomplete processing of earnings information by individuals.

Does an Analyst's Access to Information Vary with the Favorableness of Their Language When Speaking to Management?

2017 ◽  
Vol 31 (4) ◽  
pp. 13-31 ◽  
Author(s):  
Jonathan A. Milian ◽  
Antoinette L. Smith ◽  
Elio Alfonso
Keyword(s):  
Earnings Forecasts ◽  
Earnings Forecast ◽  
Access To Information ◽  
Positive Relation ◽  
Conference Calls ◽  
Large Sample ◽  
Quarterly Earnings ◽  
Similar Relation ◽  
General Experience ◽  
Brokerage Firms

SYNOPSIS We examine whether analysts who use more favorable language during earnings conference calls subsequently issue more accurate earnings forecasts. Using a large sample of earnings conference calls from the 2004–2013 period for S&P 500 firms, we find a significantly positive relation between an analyst's tone during a firm's call and the accuracy of the analyst's next quarterly earnings forecast for that firm. We find a similar relation for analysts who praise a firm's management during the call. Our findings are consistent with the favorableness of an analyst's language reflecting their access to a firm's management. In additional analyses, we find that female analysts, analysts with less general experience, analysts at smaller brokerage firms, and analysts who cover more industries, on average, use significantly more favorable language during earnings conference calls. Overall, we contribute a new proxy, incremental to other proxies, for the analyst-manager relationship.

scholarly journals The Impact of Earnings Management on Dividend Policy: Empirical Analysis of Kse-100 Index Firms

2021 ◽  
Vol 5 (2) ◽  
pp. 79-88
Author(s):  
Naveed Khan ◽  
Dr. Fayaz Ali Shah
Keyword(s):  
Dividend Policy ◽  
Stock Exchange ◽  
Random Effect ◽  
Earnings Manipulation ◽  
Governance System ◽  
Cross Sectional ◽  
Earnings Information ◽  
Dividend Policies ◽  
Long Run ◽  
The Impact

For a number of purposes management of firms indulges in earnings manipulations. Moreover, to attract investors firms distribute dividend regularly, however sometimes to do so management can manipulate earnings information. in turn, such activities negatively affect the performance of firms in long run. Hence, in current paperinvestigated earnings manipulation and dividend policies of a sample of 76KSE-100 indexnon-financial listed firms ofPakistan stock exchange during2010-2016.Data are secondary in nature and collected from annual reportsof firms.For measurement of earnings manipulation used discretionary accruals of management activities andmodified cross sectional Jones model (1995) is used.Moreover, used random effect panel data techniquefor analysis. The final results revealed that earningsmanagement and dividend payout ratio as proxy of dividend policy are negatively and insignificantly associated. Therefore, concluded that if management involves in manipulation practices then they are unable to pay their obligations as dividend. Moreover, if the governance system is strong then management cannot manipulate true information because according to governance system management should comply and explain the dividend payment procedures.

Bank Stock Returns And Quarterly Earnings: Price Responses To Imminent Earnings Announcements

2011 ◽  
Vol 11 (2) ◽  
pp. 135 ◽  
Author(s):  
Thomas F. Gosnell ◽  
Andrea J. Heuson ◽  
Robert E. Lamy
Keyword(s):  
Stock Returns ◽  
Stock Price ◽  
Earnings Announcements ◽  
Abnormal Returns ◽  
Quarterly Earnings ◽  
Price Reaction ◽  
Earnings Information ◽  
Bank Stock Returns ◽  
Stock Price Reaction ◽  
Bank Stock

Numerous studies have documented that most of the stock price reaction to earnings announcements have occurred by the time the earnings information is made public. This study considers stock price reaction during the time period between the end of the accounting calendar when the forthcoming earnings information is ostensibly available to top management and the earnings release date to measure anticipatory price responses to imminent quarterly earnings announcements. Using bank stocks, the results indicate that portfolios composed of banks that eventually announce improved earnings show significant positive abnormal returns soon after the close of the accounting quarter while portfolios composed of banks that eventually publicize poor profit performance exhibit significant negative abnormal returns.

Strategic Benchmarks in Earnings Announcements: The Selective Disclosure of Prior-Period Earnings Components

2000 ◽  
Vol 75 (2) ◽  
pp. 151-177 ◽  
Author(s):  
Catherine M. Schrand ◽  
Beverly R. Walther
Keyword(s):  
Earnings Announcements ◽  
Cross Sectional ◽  
Quarterly Earnings ◽  
Strategic Disclosure ◽  
Earnings Surprise ◽  
Current Period ◽  
Ex Post ◽  
Favorable Change ◽  
Gain Loss ◽  
Selective Disclosure

This paper provides evidence that managers strategically select the prior-period earnings amount that is used as a benchmark to evaluate current-period earnings in quarterly earnings announcements. Managers are more likely to separately announce a prior-period gain from the sale of property, plant, and equipment (PPE) than a loss. This strategy provides the lowest possible benchmark for evaluating current earnings, thereby allowing the manager to highlight the most favorable change in earnings. This strategic disclosure behavior is more likely to occur when it prevents a negative earnings surprise. The observed strategic disclosure decisions are consistent with a conjecture by managers that the nonrecurring nature of the prior-period gain/loss will be forgotten unless it is separately announced. Consistent with this conjecture, there is some evidence that equity investors, one potential target of strategic reporting, use the benchmark that managers provide in earnings announcements to evaluate current earnings, even when the components of this benchmark have different persistence. However, cross-sectional analyses provide no evidence that managers ex post exploit the equity mispricing that occurs between the earnings announcement date and the release of the financial statements.

The Earnings Event-Time Seasonal and the Calendar-Time Seasonal in Stock Returns: Naive Use of Earnings Information or Announcement Timing Effect?

1995 ◽  
Vol 10 (4) ◽  
pp. 677-698 ◽  
Author(s):  
Ray Ball ◽  
Eli Bartov
Keyword(s):  
Stock Returns ◽  
Abnormal Returns ◽  
Calendar Time ◽  
Earnings Announcement ◽  
Future Earnings ◽  
Quarterly Earnings ◽  
Earnings Information ◽  
Event Time ◽  
Unexpected Earnings ◽  
Day Of The Week

We document a pattern in the day-of-the-week timing of future earnings announcements that is predictable from knowledge of the current quarter's earnings. The pattern mimics the predictable (+, +, 0, -) dependence previously reported in both seasonally differenced quarterly earnings themselves and in estimated abnormal returns at future quarterly earnings announcement dates (the “SUE effect”; see Rendleman, Jones, and Latané [1987]; Bernard and Thomas [1990]). The predictability of abnormal returns at future earnings announcement dates therefore is not independent of the well-documented day-of-the-week seasonal in stock returns (the “DOW effect”; see Osborne [1962]; Cross [1973]; French [1980]; Gibbons and Hess [1981]). Although the DOW effect is too small to fully explain the SUE effect, it appears to contribute to it, since both past SUE and current earnings announcement DOW are incremental in explaining announcement-day estimated abnormal returns. The unclear role of size and the presence of errors in estimating both unexpected earnings and its announcement day suggest caution in interpreting these results.

Refinements to Ice Particle Mass Dimensional and Terminal Velocity Relationships for Ice Clouds. Part I: Temperature Dependence

2007 ◽  
Vol 64 (4) ◽  
pp. 1047-1067 ◽  
Author(s):  
Andrew J. Heymsfield ◽  
Aaron Bansemer ◽  
Cynthia H. Twohy
Keyword(s):  
Weather Forecast ◽  
Terminal Velocity ◽  
Fall Velocity ◽  
Cross Sectional ◽  
Convective Clouds ◽  
Particle Mixing ◽  
Particle Dimension ◽  
Mass Dimension ◽  
Forecast Models ◽  
Ice Water

Abstract This two-part study attempts to find appropriate mass dimension and terminal velocity relationships that, when considered together with particle size distributions (PSD), agree with coincident measurements of ice water content (IWC), and with variables related to higher moments such as the mean mass-weighted fall speed. Reliable relationships are required for improving microphysical parameterizations for weather forecast models and developing methods for evaluating them, subjects addressed in detail in Part II of this study. Here, a range of values from 1.5 to 2.3 is assumed for the exponent b in the mass dimension relationship, m = aDb, where D is the maximum particle dimension, to bound its likely value for sizes above about 100 μm. Measured IWC and size spectra are used to find appropriate values for the coefficient a. It is demonstrated that all values of the exponent b, with appropriate a coefficients, can fit the IWC measurements. Coincident information on particle cross-sectional areas with the m(D) relationships is used to develop general fall velocity relationships of the form Vt = ADB. These assessments use five midlatitude, synoptically generated ice layers, and 10 low-latitude, convectively generated ice cloud layers, spanning the temperature range from −60° to 0°C. The coefficients a and A and exponent B are represented in terms of the exponent b and are shown to be temperature-dependent for the synoptic clouds and relatively independent of it in the convective clouds, a result of particle mixing through the cloud column. Consistency is found with earlier results and with analytic considerations. It is found that the fall velocity is inversely proportional to the air density to approximately the exponent 0.54, close to values assumed in earlier studies.

Overstated Quarterly Earnings and Analysts' Earnings Forecast Revisions

1995 ◽  
Vol 26 (6) ◽  
pp. 781-799 ◽  
Author(s):  
Michael Ettredge ◽  
Philip B. Shane ◽  
David B. Smith
Keyword(s):  
Earnings Forecast ◽  
Forecast Revisions ◽  
Quarterly Earnings
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