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Author: Armen Hovakimian
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
We examine the spillover effects of the Global Analyst Research Settlement (or Global Settlement) on analysts' earnings forecasts in 40 developed and emerging markets. Prior to the Global Settlement, analysts generally made overly optimistic forecasts, this bias tending to be higher in countries with less investor protection. This forecast bias declined significantly after passage of the Global Settlement, the spillover effect being stronger for countries with lower investor protection. The spillover effect is also stronger for countries with a more significant presence of the analysts of the 12 banks directly involved in the Global Settlement.
Author: Armen Hovakimian
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
We examine the spillover effects of the Global Analyst Research Settlement (or Global Settlement) on analysts' earnings forecasts in 40 developed and emerging markets. Prior to the Global Settlement, analysts generally made overly optimistic forecasts, this bias tending to be higher in countries with less investor protection. This forecast bias declined significantly after passage of the Global Settlement, the spillover effect being stronger for countries with lower investor protection. The spillover effect is also stronger for countries with a more significant presence of the analysts of the 12 banks directly involved in the Global Settlement.
Author: Bin Ke
Publisher:
ISBN:
Category :
Languages : en
Pages : 63
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Book Description
This study offers evidence on the earnings forecast bias analysts use to please firm management and the associated benefits they obtain from issuing such biased forecasts in the years prior to Regulation Fair Disclosure. Analysts who issue initial optimistic earnings forecasts followed by pessimistic earnings forecasts before the earnings announcement produce more accurate earnings forecasts and are less likely to be fired by their employers. The effect of such biased earnings forecasts on forecast accuracy and firing is stronger for analysts who follow firms with heavy insider selling and hard-to-predict earnings. The above results hold regardless of whether a brokerage firm has investment banking business or not. These results are consistent with the hypothesis that analysts use biased earnings forecasts to curry favor with firm management in order to obtain better access to management's private information.
Author: Bente Villadsen
Publisher: Academic Press
ISBN: 0128125888
Category : Business & Economics
Languages : en
Pages : 362
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Book Description
Risk and Return for Regulated Industries provides a much-needed, comprehensive review of how cost of capital risk arises and can be measured, how the special risks regulated industries face affect fair return, and the challenges that regulated industries are likely to face in the future. Rather than following the trend of broad industry introductions or textbook style reviews of utility finance, it covers the topics of most interest to regulators, regulated companies, regulatory lawyers, and rate-of-return analysts in all countries. Accordingly, the book also includes case studies about various countries and discussions of the lessons international regulatory procedures can offer. Presents a unified treatment of the regulatory principles and practices used to assess the required return on capital Addresses current practices before exploring the ways methods play out in practice, including irregularities, shortcomings, and concerns for the future Focuses on developed economies instead of providing a comprehensive global reviews Foreword by Stewart C. Myers
Author: Stan Beckers
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Forecasting company earnings is a difficult and hazardous task. In an efficient market where analysts learn from past mistakes, there should be no persistent and systematic biases in consensus earnings accuracy. Previous research has already established how some (single) individual-company characteristics systematically influence forecast accuracy. So far, however, the effect on consensus earnings biases of a company's sector and country affiliation combined with a range of other fundamental characteristics has remained largely unexplored. Using data for 1993-2002, this article disentangles and quantifies for a broad universe of European stocks how the number of analysts following a stock, the dispersion of their forecasts, the volatility of earnings, the sector and country classification of the covered company, and its market capitalization influence the accuracy of the consensus earnings forecast.
Author: Robert J. Shiller
Publisher: Princeton University Press
ISBN: 1400865530
Category : Business & Economics
Languages : en
Pages : 393
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Book Description
Why the irrational exuberance of investors hasn't disappeared since the financial crisis In this revised, updated, and expanded edition of his New York Times bestseller, Nobel Prize–winning economist Robert Shiller, who warned of both the tech and housing bubbles, cautions that signs of irrational exuberance among investors have only increased since the 2008–9 financial crisis. With high stock and bond prices and the rising cost of housing, the post-subprime boom may well turn out to be another illustration of Shiller's influential argument that psychologically driven volatility is an inherent characteristic of all asset markets. In other words, Irrational Exuberance is as relevant as ever. Previous editions covered the stock and housing markets—and famously predicted their crashes. This edition expands its coverage to include the bond market, so that the book now addresses all of the major investment markets. It also includes updated data throughout, as well as Shiller's 2013 Nobel Prize lecture, which places the book in broader context. In addition to diagnosing the causes of asset bubbles, Irrational Exuberance recommends urgent policy changes to lessen their likelihood and severity—and suggests ways that individuals can decrease their risk before the next bubble bursts. No one whose future depends on a retirement account, a house, or other investments can afford not to read this book.
Author: Anna Scherbina
Publisher:
ISBN:
Category :
Languages : en
Pages : 32
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Book Description
I present evidence of inefficient information processing in equity markets by documenting that biases in analysts' earnings forecasts are reflected in stock prices. In particular, I show that investors fail to fully account for optimistic bias associated with analyst disagreement. This bias arises for two reasons. First, analysts issue more optimistic forecasts when earnings are uncertain. Second, analysts with sufficiently low earnings expectations who choose to keep quiet introduce an optimistic bias in the mean reported forecast that is increasing in the underlying disagreement. Indicators of the missing negative opinions predict earnings surprises and stock returns. By selling stocks with high analyst disagreement institutions exert correcting pressure on prices.
Author: Hakan Saraoglu
Publisher:
ISBN:
Category : Business forecasting
Languages : en
Pages : 318
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Book Description
Author: Bennett Salvatora
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The following study analyzes the accuracy and bias of sell-side equity analyst's long-term earnings per share growth forecasts. Having a firm understanding of the accuracy of analyst's long-term earnings per share estimates is vital for any professionals using such forecasts when performing financial valuation, estimating cost of capital, and making investment decisions. By comparing long-term earnings per share growth rate estimates to actual earnings per share growth rates observed, both the accuracy and bias of forecasts were evaluated.Specifically, this study was focused on discovering whether analysts' estimates have improved over time. Even with the implementation of recent regulatory reforms aimed to improve the bias and inaccuracy of analyst forecasts, this study found no significant evidence that such changes have been helpful in improving the accuracy or continued upward bias that exists in long-term earnings per share growth rate estimates. Recognition of this persistent bias and inaccuracy of long-term earnings per share growth rate estimates is vital for all market participants to understand and take into consideration in order to make prudent investment decisions.
Author: Hassan Espahbodi
Publisher:
ISBN:
Category : Accounting
Languages : en
Pages : 41
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Book Description
Violation of securities laws and corporate scandals led to the passage of Regulation Fair Disclosure and the Sarbanes-Oxley Act, and to the Global Analyst Research Settlement, in early 2000. These regulations were designed to protect investors by reducing analyst conflicts of interest and improving the quality of financial information. As such, these regulations were expected to improve analysts' earnings forecast. This paper examines the trend in accuracy and dispersion of analysts' earnings forecasts over the period 1994-2009 to determine if forecast properties improved following these regulations. Consistent with the evidence provided by many of the earlier studies, we do find that forecast accuracy and dispersion improved during the period immediately after these regulations. This finding supports the notion (although it does not prove) that these regulations achieved their objectives in the short run. However, univariate and multivariate tests over the longer period show that analyst forecast accuracy declined and forecast dispersion significantly increased in subsequent years. The results are robust to alternative measures of our dependent variables, specifications of pre- and post-regulation periods, and sample composition; and imply that these regulations did not collectively improve the information environment despite the reduction in analyst conflicts of interest. The continued problem with the information environment, therefore, seems to be largely due to the quality of financial reports. Also, the difference between short- and long-term results suggest that regulators need to weigh the cost of regulations against both their short- and long-term benefits.
Author: Seung-Woog Kwag
Publisher:
ISBN:
Category :
Languages : en
Pages : 110
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Book Description
