Security Price Reactions to Long-Range Executive Earnings Forecasts

1979 ◽  
Vol 17 (1) ◽  
pp. 140 ◽  
Author(s):  
Donald R. Nichols ◽  
Jeffrey J. Tsay
Keyword(s):  
Long Range ◽  
Earnings Forecasts ◽  
Security Price ◽  
Price Reactions

Dispersion in Analysts' Earnings Forecasts as a Measure of Uncertainty

1998 ◽  
Vol 13 (3) ◽  
pp. 245-270 ◽  
Author(s):  
Orie E. Barron ◽  
Pamela S. Stuerke
Keyword(s):  
Stock Returns ◽  
Earnings Forecasts ◽  
Positive Association ◽  
Cash Flows ◽  
Financial Reports ◽  
Forecast Dispersion ◽  
Additional Information ◽  
Price Reactions ◽  
Daily Stock Returns ◽  
Future Cash Flows

This study examines whether dispersion in analysts' earnings forecasts reflects uncertainty about firms' future economic performance. Prior research examining this issue has been inconclusive. These studies have concluded that forecast dispersion is likely to reflect factors other than uncertainty about future cash flows, such as uncertainty about the price irrelevant component of firms' financial reports (Daley et al. [1988]; Imhoff and Lobo [1992]). Abarbanell et al. (1995) argue that, if forecast dispersion after (i.e., conditional on) an earnings announcement reflects uncertainty about firms' future cash flows and this uncertainty causes investors to desire additional information, then dispersion will be positively associated with both (a) the level of demand for more information and (b) the magnitude of price reactions around the subsequent earnings release. In this study, we construct a measure of informational demand using the incidence of analyst forecast updating after dispersion is measured. We find a positive association between dispersion in earnings forecasts after an earnings release and this measure of informational demand. We also find a positive association between forecast dispersion and the magnitude of price reactions around subsequent earnings releases. These associations are most apparent when potentially stale (or outdated) forecasts are removed from measures of forecast dispersion. These associations also persist after controlling for other measures of uncertainty (e.g., beta and the variance of daily stock returns), consistent with dispersion in analysts' earnings forecasts serving as a useful indicator of uncertainty about the price relevant component of firms' future earnings.

Delayed Security Price Adjustments to Financial Analysts' Forecasts of Annual Earnings

2001 ◽  
Vol 76 (4) ◽  
pp. 613-632 ◽  
Author(s):  
Pieter T. Elgers ◽  
May H. Lo ◽  
Ray J. Pfeiffer
Keyword(s):  
Financial Analysts ◽  
Earnings Forecasts ◽  
Security Market ◽  
Analyst Coverage ◽  
Future Earnings ◽  
Price Response ◽  
Portfolio Returns ◽  
Price Adjustments ◽  
Security Price ◽  
Annual Earnings

This paper documents that the weighting of analysts' annual earnings forecasts implicit in security prices is lower than the historical relation between financial analysts' forecasts and realized earnings. Short positions in securities in the bottom decile and long positions in the top decile of the crosssectional distribution of analysts' early-in-the-year earnings forecasts generate significant hedge-portfolio returns in the year after portfolio formation. This delayed price response is more pronounced for firms with relatively low analyst coverage, consistent with the premise that low financial analyst coverage is associated with a variety of factors that impede the information efficiency of the security market. The hedge-portfolio returns concentrate in the months of subsequent quarterly earnings announcements, suggesting that the delayed security price adjustments reflect the market's failure to incorporate information in analysts' forecasts about future earnings, rather than deficiencies in our conditional expectations of security returns.

scholarly journals Value relevance of key accounting information and earnings management: high-tech versus low-tech firms

2007 ◽  
Vol 4 (4) ◽  
pp. 285-299
Author(s):  
Sung S. Kwon ◽  
Brian Gaber ◽  
Peggy Ng
Keyword(s):  
Earnings Management ◽  
Value Relevance ◽  
Accounting Information ◽  
Discretionary Accruals ◽  
High Tech ◽  
Sample Period ◽  
Financial Variables ◽  
Security Price ◽  
Price Reactions ◽  
And Performance

This paper examines the value-relevance of primary accounting information and the size of earnings management concurrently for high-tech versus low-tech firms. Specifically, the results reveal that earnings and changes in earnings of high-tech firms reflect lower levels of security price reactions and associations than those of low-tech firms. In addition, consistent with evidence from prior research, greater levels of earnings management, measured by modified Jones and performance-matched discretionary accruals (proxies for earnings management), exist for high-tech firms vis-à-vis low-tech firms over the sample period. More importantly, this paper also documents that the association between cumulative adjusted returns and key financial variables, including earnings, changes in earnings, sales, and changes in sales, remains weaker for high-tech firms than for low-tech firms even after levels of earnings management have been controlled for.

SECURITY PRICE REACTIONS AROUND PRODUCT RECALL ANNOUNCEMENTS

1986 ◽  
Vol 9 (2) ◽  
pp. 113-122 ◽  
Author(s):  
Stephen W. Pruitt ◽  
David R. Peterson
Keyword(s):  
Product Recall ◽  
Security Price ◽  
Price Reactions

Security price reactions around corporate spin-off announcements

1983 ◽  
Vol 12 (4) ◽  
pp. 409-436 ◽  
Author(s):  
Gailen L. Hite ◽  
James E. Owers
Keyword(s):  
Security Price ◽  
Price Reactions

Client Security Price Reactions to the Laventhol and Horwath Bankruptcy

1995 ◽  
Vol 33 (2) ◽  
pp. 385 ◽  
Author(s):  
William R. Baber ◽  
Krishna R. Kumar ◽  
Thomas Verghese
Keyword(s):  
Security Price ◽  
Price Reactions
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