Financial Analysts’ Response After Corporate Earnings Announcements and Forecast Quality

2021 ◽  
Author(s):  
Andreas Charitou ◽  
Nikolaos Floropoulos ◽  
Irene Karamanou
Keyword(s):  
Earnings Announcements ◽  
Financial Analysts ◽  
Corporate Earnings ◽  
Forecast Quality

Concurrent Earnings Announcements and Analysts' Information Production

2019 ◽  
Vol 95 (1) ◽  
pp. 165-189 ◽  
Author(s):  
Matthew Driskill ◽  
Marcus P. Kirk ◽  
Jennifer Wu Tucker
Keyword(s):  
Earnings Announcements ◽  
Financial Analysts ◽  
Earnings Forecasts ◽  
Data Availability ◽  
Limited Attention ◽  
Conference Calls ◽  
Stock Recommendations ◽  
Rich Information ◽  
Sample Firm ◽  
Jel Classifications

ABSTRACT We examine whether financial analysts are subject to limited attention. We find that when analysts have another firm in their coverage portfolio announcing earnings on the same day as the sample firm (a “concurrent announcement”), they are less likely to issue timely earnings forecasts for the sample firm's subsequent quarter than analysts without a concurrent announcement. Among the analysts who issue timely earnings forecasts, the thoroughness of their work decreases as their number of concurrent announcements increases. In addition, analysts are more sluggish in providing stock recommendations and less likely to ask questions in earnings conference calls as their number of concurrent announcements increases. Moreover, when analysts face concurrent announcements, they tend to allocate their limited attention to firms that already have rich information environments, leaving behind firms in need of attention. Overall, our evidence suggests that even financial analysts, who serve as information specialists, are subject to limited attention. JEL Classifications: G10; G11; G17; G14. Data Availability: Data are publicly available from the sources identified in the paper.

scholarly journals The Strategic Responses from Sophisticated Investors to Inaccurate Forecast of Financial Analysts

2018 ◽  
Vol 7 (1) ◽  
pp. 272
Author(s):  
Kuo-Hao Lee ◽  
Loreen M. Powell ◽  
Lam Nguyen ◽  
Evren Eryilmaz
Keyword(s):  
Information Quality ◽  
Earnings Announcements ◽  
Financial Analysts ◽  
Cash Flows ◽  
Strategic Responses ◽  
Short Sellers ◽  
Unexpected Earnings ◽  
New Information ◽  
Informed Traders ◽  
Trading Activities

We examine whether there are more information based trading activities that are generated around the time of earnings announcements. We distinguish between the influence of information based traders, especially short sellers, and market information quality through the reaction of participants to new information derived from corporate earnings announcements. We find that informed traders do take advantage of overpriced stocks, and do short stocks before the confirmation of past expectations of future cash flows from corporates. We apply Standardized Unexpected Earnings (SUE) in the method and our result indicates that informed traders are more likely to take advantage of overpriced stocks, using a tool (shorting) that is not traditionally used by unsophisticated investors. We also demonstrate an unique finding that informed traders follow stock analysts not for investing advice, but to take advantage of those unsophisticated investors that buy in to the rhetoric expressed by financial analysts.

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