Empirical Evidence of Analyst Behavior and Market Reaction to the Earnings Forecast - Does Reg Fd Matter?

2006 ◽  
Author(s):  
Peng Fei ◽  
Ying L. Becker
Keyword(s):  
Empirical Evidence ◽  
Market Reaction ◽  
Earnings Forecast ◽  
Analyst Behavior ◽  
Reg Fd

An Empirical Test of the Signaling Effect of Management's Earnings Forecasts: A Decomposition of the Earnings Surprise and Forecast Surprise Effects

1995 ◽  
Vol 10 (4) ◽  
pp. 787-802 ◽  
Author(s):  
Gillian Hian Heng Yeo ◽  
David A. Ziebart
Keyword(s):  
Stock Market ◽  
Market Reaction ◽  
Empirical Test ◽  
Earnings Forecasts ◽  
The Other ◽  
Earnings Forecast ◽  
Corporate Management ◽  
Management Earnings Forecasts ◽  
Market Reactions ◽  
Earnings Surprise

When corporate management issues an earnings forecast there are potentially two surprises. One potential surprise is that a forecast was issued and the other is the surprise in the earnings forecast. Accordingly, the observed stock market reaction to management earnings forecasts may be due to one or the other, or both. This study decomposes the cross-sectional variability in stock market reactions to management earnings forecasts into the portions attributable to the forecast surprise and the earnings surprise. The results indicate that the market's reaction is a function of both the earnings surprise and the forecast surprise. However, the market reaction is more associated with forecast surprise than with the earnings surprise. This suggests that results in previous studies on the market reactions to management earnings forecasts may need to be reconsidered.

Market Reaction to Auditor Ratification Vote Tally

2017 ◽  
Vol 31 (1) ◽  
pp. 141-157 ◽  
Author(s):  
Paul N. Tanyi ◽  
Kristin C. Roland
Keyword(s):  
Empirical Evidence ◽  
Audit Quality ◽  
Market Reaction ◽  
Client Relationship ◽  
High Level ◽  
Auditor Characteristics ◽  
Jel Classifications

SYNOPSIS This paper provides empirical evidence that the proportion of shareholder votes against the ratification of the auditor is informative to investors' perception of the auditor-client relationship. We find that lower shareholder approval of the auditor is associated with a negative market reaction to the 8-K announcement of the auditor ratification vote. Additionally, we find that the market reaction is more negative when a high level of auditor dissatisfaction is likely a surprise to investors, such as when audit and auditor characteristics suggest that the auditor provides high audit quality. We provide confirming evidence that withheld votes are associated with a higher likelihood of a future auditor dismissal and that the market reaction to the dismissal is more positive for firms with lower shareholder approval of the auditor. JEL Classifications: G34; G30; M40.

Distinguishing Rational and Behavioral Models of Momentum

2013 ◽  
Vol 03 (03n04) ◽  
pp. 1350014
Author(s):  
Dongmei Li
Keyword(s):  
Empirical Evidence ◽  
Simulated Data ◽  
Earnings Forecast ◽  
Structural Uncertainty ◽  
Behavioral Models ◽  
Rational Models ◽  
Short Run ◽  
Forecast Revision ◽  
The Many ◽  
Earnings Change

One of the many challenges facing financial economists is to distinguish the theories explaining momentum. Brav and Heaton (2002) show that it is very difficult to distinguish the "rational" models of structural uncertainty (SU) from "behavioral" models of conservatism (C). In this paper, I reexamine the SU model and the C model proposed by Brav and Heaton (2002) in explaining short-run momentum. Based on simulated data, I find that they differ from each other in the relation between agent's earnings forecast revision and the lagged earnings change. This relation is significantly negative for the SU model and significantly positive for the C model. Empirical evidence provides support for the SU model.

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