Management Earnings Forecasts and the Quality of Analysts' Forecasts PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Management Earnings Forecasts and the Quality of Analysts' Forecasts PDF full book. Access full book title Management Earnings Forecasts and the Quality of Analysts' Forecasts by Carol Liu. Download full books in PDF and EPUB format.
Author: Carol Liu
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
Get Book Here
Book Description
This study investigates whether effective audit committees influence the association between management earnings forecasts and the properties of analysts" forecasts. We posit that this influence on the part of an audit committee would likely result from increased responsibility for monitoring voluntary disclosure. Using the four attributes that the Blue Ribbon Committee (1999) and prior research suggest as being indicative of audit committee effectiveness, we find that analysts" forecasts exhibit higher accuracy and lower dispersion with the issuance of management forecasts for those firms employing audit committees that are composed exclusively of independent directors, include an accounting expert, and act with due diligence. We also find that effective audit committees strengthen the association between management and analyst forecast accuracy. Our evidence, therefore, supports the notion that effective corporate governance influences the reliability of voluntary disclosure, and thereby benefits the users of financial information.
Author: Carol Liu
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
Get Book Here
Book Description
This study investigates whether effective audit committees influence the association between management earnings forecasts and the properties of analysts" forecasts. We posit that this influence on the part of an audit committee would likely result from increased responsibility for monitoring voluntary disclosure. Using the four attributes that the Blue Ribbon Committee (1999) and prior research suggest as being indicative of audit committee effectiveness, we find that analysts" forecasts exhibit higher accuracy and lower dispersion with the issuance of management forecasts for those firms employing audit committees that are composed exclusively of independent directors, include an accounting expert, and act with due diligence. We also find that effective audit committees strengthen the association between management and analyst forecast accuracy. Our evidence, therefore, supports the notion that effective corporate governance influences the reliability of voluntary disclosure, and thereby benefits the users of financial information.
Author: Sundaresh Ramnath
Publisher: Now Publishers Inc
ISBN: 1601981627
Category : Business & Economics
Languages : en
Pages : 125
Get Book Here
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: Stephen P. Baginski
Publisher:
ISBN:
Category :
Languages : en
Pages : 32
Get Book Here
Book Description
The 1990s were characterized by substantial increases in the performance of and investor reliance on financial analysts. Because managers possess superior private information and issue forecasts to align investors' expectations with their own, we predict that managers increased the quality of their earnings forecasts during the 1990s in order to keep pace with the improved forward-looking information provided by financial analysts, upon which investors increasingly relied.Using a sample of 2,437 management earnings forecasts, we document an increase in management earnings forecast precision, management earnings forecast accuracy, and managers' tendency to explain earnings forecasts in 1993-1996 relative to 1983-1986. Given that these forecast characteristics are linked to greater informativeness and credibility, we also document that the information content of management earnings forecasts, as measured by the strength of share price responses to forecast news, increased in 1993-1996 relative to 1983-1986. As expected, the increased information content of management forecasts primarily occurred for firms covered by financial analysts.
Author: Yongtae Kim
Publisher:
ISBN:
Category :
Languages : en
Pages : 45
Get Book Here
Book Description
This study examines the stock-price reactions to analyst forecast revisions around earnings announcements to test whether pre-announcement forecasts reflect analysts' private information or piggybacking on confounding events and news. We find that management earnings forecasts influence the timing and precision of analyst forecasts. More importantly, evidence suggests that prior studies' finding of weaker (stronger) stock-price responses to forecast revisions in the period immediately after (before) the prior-quarter earnings announcement disappears once management earnings forecasts are controlled for. To the extent that management earnings forecasts are public disclosures, our results suggest that the importance of analysts' information discovery role documented in prior studies is likely to be overstated.
Author: Francis A. Lees
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 56
Get Book Here
Book Description
Author: Hwa Deuk Yi
Publisher:
ISBN:
Category : Corporate profits
Languages : en
Pages : 236
Get Book Here
Book Description
Author: Kenneth J. Merkley
Publisher:
ISBN:
Category :
Languages : en
Pages : 48
Get Book Here
Book Description
We provide archival evidence on how a particular type of supplementary information affects the credibility of management earnings forecasts. Managers often provide detailed forecasts of specific income statement line items to shed light on how they plan to achieve their bottom-line earnings targets. We assess the effect of this forecast disaggregation on the credibility of management earnings forecasts. Based on a relatively large hand-collected sample of 900 management earnings forecasts, we find that disaggregation increases analysts' sensitivity to the news in managers' earnings guidance, suggesting that analysts find the guidance more credible. More importantly, we identify several factors that influence this relation. First, disaggregation plays a more important role when earnings are otherwise more difficult to forecast. Second, disaggregation is more important after Regulation Fair Disclosure prohibited selective disclosure, especially for firms that were more affected because they had previously provided more private guidance. Finally, in contrast to common assertions in the prior literature, we find that in more recent years, disaggregation matters more for guidance that conveys bad news. Managers as well as researchers should be interested in evidence suggesting that financial analysts find disaggregation especially helpful in contexts where managers' credibility is particularly important.
Author: Xiaohui Liu
Publisher:
ISBN:
Category :
Languages : en
Pages : 91
Get Book Here
Book Description
Previous literature studies analysts' earnings forecasts without considering firms' response to analysts' forecasts. This study improves upon previous research by considering firms' earnings management with respect to analysts' forecasts. I hypothesize that analysts understand these earnings management practices, and incorporate firms' expected behavior into their forecasts. I demonstrate that for firms with high tendencies and flexibilities to manage earnings downwards, and/or firms with negatively skewed earnings, analysts account for earnings management practices by lowering the otherwise optimal forecasts. Comparing analysts' consensus forecasts with proxy for non-strategic forecasts (otherwise optimal forecasts), I find that analysts' forecasts are systematically below the non-strategic forecasts for firm-quarters that have: high accounting reserves available to manage earnings downwards, high unmanaged earnings, low debt to equity ratios, negative forecasted earnings, and negatively skewed unmanaged earnings. These results suggest that analysts forecast below the non-strategic level in order to avoid the large optimistic forecast errors that occur when firms who cannot meet forecasts manage earnings downward. The test results also suggest that analysts forecast above the non-strategic forecasts when earnings are positively skewed, and/or when firms have high tendencies and flexibilities to manage earnings upwards.
Author: Lawrence D. Brown
Publisher:
ISBN:
Category :
Languages : en
Pages : 38
Get Book Here
Book Description
We examine interactions between analyst earnings forecasts and management earnings forecasts by investigating: (1) managers' comparative efficiency relative to analysts at incorporating past earnings changes, accruals, stock returns and analyst-based earnings surprises into their earnings forecasts; (2) extent to which analyst inefficiencies in incorporating these four pieces of publicly available information into their earnings forecasts prompt managers to issue earnings forecasts; and (3) role of these four pieces of information at improving analyst forecasts after they have observed management forecasts. We show that: (1) unlike analysts, managers do efficiently incorporate information from past returns into their earnings forecasts; (2) analysts' failure to incorporate past returns information into earnings forecasts is the primary trigger for managers to issue their own earnings forecasts; and (3) after management forecasts, analyst forecasts improve most significantly with respect to incorporating past returns information.
Author: Robert H. Jennings
Publisher:
ISBN: 9780972147736
Category : Corporate profits
Languages : en
Pages : 38
Get Book Here
Book Description
