How Does the Market Interpret Analysts' Long-term Growth Forecasts? PDF Download
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Author: Steven Alan Sharpe
Publisher:
ISBN:
Category : Economic forecasting
Languages : en
Pages : 40
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Book Description
Author: Steven Alan Sharpe
Publisher:
ISBN:
Category : Economic forecasting
Languages : en
Pages : 40
Get Book Here
Book Description
Author: Steven A. Sharpe
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Author: Aili Li
Publisher:
ISBN:
Category :
Languages : en
Pages : 428
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Book Description
Author: Sundaresh Ramnath
Publisher: Now Publishers Inc
ISBN: 1601981627
Category : Business & Economics
Languages : en
Pages : 125
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Book Description
Financial Analysts' Forecasts and Stock Recommendations reviews research related to the role of financial analysts in the allocation of resources in capital markets. The authors provide an organized look at the literature, with particular attention to important questions that remain open for further research. They focus research related to analysts' decision processes and the usefulness of their forecasts and stock recommendations. Some of the major surveys were published in the early 1990's and since then no less than 250 papers related to financial analysts have appeared in the nine major research journals that we used to launch our review of the literature. The research has evolved from descriptions of the statistical properties of analysts' forecasts to investigations of the incentives and decision processes that give rise to those properties. However, in spite of this broader focus, much of analysts' decision processes and the market's mechanism of drawing a useful consensus from the combination of individual analysts' decisions remain hidden in a black box. What do we know about the relevant valuation metrics and the mechanism by which analysts and investors translate forecasts into present equity values? What do we know about the heuristics relied upon by analysts and the market and the appropriateness of their use? Financial Analysts' Forecasts and Stock Recommendations examines these and other questions and concludes by highlighting area for future research.
Author: Gregory Alan Sommers
Publisher:
ISBN:
Category :
Languages : en
Pages : 194
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Book Description
Abstract: Questions have been raised in the business press and prior academic research about future years' earnings forecast credibility, particularly long-term growth. This paper documents the market response to revisions in analysts' earnings forecasts for the next year and long-term growth (collectively "future years' earnings"). First, I show there is information content in future years' earnings forecast revisions as evidenced by changes in return volatility and volume at their release. Second, there is a direct market response to the magnitudes of the revisions in the next years' earnings forecasts and to upward revisions in long-term growth forecasts as evidenced by the coefficient relating the unexpected returns to the unexpected portion of the revisions. Finally, I find that investors use the next year earnings forecasts interpret the expected persistence of current year earnings forecast revisions. This is evidenced by increases (decreases) in the coefficient relating unexpected returns to the current year earnings forecast revisions when the next year earnings forecast revision is in the same (opposite) direction. This study documents market response to future years' earnings forecast revisions and indicates that they affect how investors respond to the revisions in current year earnings forecasts.
Author: Boochun Jung
Publisher:
ISBN:
Category :
Languages : en
Pages : 49
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Book Description
Prior literature refers to economic incentives to generate investment banking business and trading commissions as explanations for analyst publication of forecasts of firms' long-term earnings growth (LTG). Prior research also documents wildly optimistic LTG forecasts and a negative relation between LTG forecasts and subsequent excess returns. Thus, the literature portrays analysts' LTG forecasts as nonsensical from a valuation perspective. We introduce and investigate a new perspective on the value-relevance of analyst publication of LTG forecasts. We hypothesize that analysts issuing LTG forecasts signal relatively high effort and ability in developing perspective of the subject firms' long-term prospects. Consistent with this hypothesis, we find that the stock market responds more strongly to the stock recommendation revisions of analysts who publish accompanying LTG forecasts. In addition, we hypothesize and find that analysts issuing LTG forecasts are less likely to leave the profession or move to smaller brokerage houses. Consistent with Reg. FD's intention to restrict analyst access to insider information and promote fundamental analysis of the valuation implications of firms' long-term prospects, we find that post-Reg. FD observations drive most of our results. Overall, we identify previously undocumented benefits accruing to analysts who publish LTG forecasts.
Author: Werner Fransiscus Marcel De Bondt
Publisher: Cfa Inst
ISBN: 9780943205137
Category : Stock price forecasting
Languages : en
Pages : 36
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Book Description
Author: Steven Alan Sharpe
Publisher:
ISBN:
Category : Stock price forecasting
Languages : en
Pages : 58
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Book Description
Author: Peter Easton
Publisher: Now Publishers Inc
ISBN: 1601981945
Category : Business & Economics
Languages : en
Pages : 148
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Book Description
Estimating the Cost of Capital Implied by Market Prices and Accounting Data focuses on estimating the expected rate of return implied by market prices, summary accounting numbers, and forecasts of earnings and dividends. Estimates of the expected rate of return, often used as proxies for the cost of capital, are obtained by inverting accounting-based valuation models. The author describes accounting-based valuation models and discusses how these models have been used, and how they may be used, to obtain estimates of the cost of capital. The practical appeal of accounting-based valuation models is that they focus on the two variables that are commonly at the heart of valuations carried out by equity analysts -- forecasts of earnings and forecasts of earnings growth. The question at the core of this monograph is -- How can these forecasts be used to obtain an estimate of the cost of capital? The author examines the empirical validity of the estimates based on these forecasts and explores ways to improve these estimates. In addition, this monograph details a method for isolating the effect of any factor of interest (such as cross-listing, fraud, disclosure quality, taxes, analyst following, accounting standards, etc.) on the cost of capital. If you are interested in understanding the academic literature on accounting-based estimates of expected rate of return this monograph is for you. Estimating the Cost of Capital Implied by Market Prices and Accounting Data provides a foundation for a deeper comprehension of this literature and will give a jump start to those who have an interest in these topics. The key ideas are introduced via examples based on actual forecasts, accounting information, and market prices for listed firms, and the numerical examples are based on sound algebraic relations.
Author: Gregg S. Fisher
Publisher:
ISBN:
Category :
Languages : en
Pages : 47
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Book Description
We decompose consensus analyst long-term growth forecasts into a hard growth component that captures accounting information (asset and sales growth, profitability and equity dilution) and an orthogonal soft growth component. The soft component does not forecast future returns, and the hard component does forecast future returns, but in a perverse way. Specifically, stocks with accounting information indicating favorable long-term growth forecasts tend to realize negative future excess returns. This and other evidence we present is consistent with biased long-term growth forecasts generating stock mispricing.
