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Determinants Of Earnings Forecast Error Earnings Forecast Revision And Earnings Forecast Accuracy
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Book Synopsis Determinants of Earnings Forecast Error, Earnings Forecast Revision and Earnings Forecast Accuracy by : Sebastian Gell
Download or read book Determinants of Earnings Forecast Error, Earnings Forecast Revision and Earnings Forecast Accuracy written by Sebastian Gell and published by Springer Science & Business Media. This book was released on 2012-03-26 with total page 144 pages. Available in PDF, EPUB and Kindle. Book excerpt: Earnings forecasts are ubiquitous in today’s financial markets. They are essential indicators of future firm performance and a starting point for firm valuation. Extremely inaccurate and overoptimistic forecasts during the most recent financial crisis have raised serious doubts regarding the reliability of such forecasts. This thesis therefore investigates new determinants of forecast errors and accuracy. In addition, new determinants of forecast revisions are examined. More specifically, the thesis answers the following questions: 1) How do analyst incentives lead to forecast errors? 2) How do changes in analyst incentives lead to forecast revisions?, and 3) What factors drive differences in forecast accuracy?
Book Synopsis New Determinants of Analysts’ Earnings Forecast Accuracy by : Tanja Klettke
Download or read book New Determinants of Analysts’ Earnings Forecast Accuracy written by Tanja Klettke and published by Springer Science & Business. This book was released on 2014-04-28 with total page 120 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial analysts provide information in their research reports and thereby help forming expectations of a firm’s future business performance. Thus, it is essential to recognize analysts who provide the most precise forecasts and the accounting literature identifies characteristics that help finding the most accurate analysts. Tanja Klettke detects new relationships and identifies two new determinants of earnings forecast accuracy. These new determinants are an analyst’s “general forecast effort” and the “number of supplementary forecasts”. Within two comprehensive empirical investigations she proves these measures’ power to explain accuracy differences. Tanja Klettke’s research helps investors and researchers to identify more accurate earnings forecasts.
Book Synopsis The Relative Importance of Forecast Accuracy Determinants Revisited by : Alain Coen
Download or read book The Relative Importance of Forecast Accuracy Determinants Revisited written by Alain Coen and published by . This book was released on 2008 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze earnings forecasting errors made by financial analysts for 18 European countries over the 1995-2006 period. We use the Heston-Rouwenhorst approach to unravel country-, industry-, and firm-specific effects as a source of variation in financial analysts' earnings forecast errors. We first estimate each effect with a dummy variable regression, and then decompose the variance of forecast errors into different effects. We provide evidence that the differences among countries, industrial sectors, or analyst following offer a weak explanation for differences in forecast errors. Country effects however largely dominate industry and analyst following effects on European stock markets. By contrast, the type of earnings - profits or losses - and variations in earnings - increases or decreases - play a significant role in the performance of financial analysts.
Book Synopsis Theory and Evidence of Ex-ante Determinants of Analyst Earnings Forecast Accuracy in the International Context by : Huong Ngo Higgins
Download or read book Theory and Evidence of Ex-ante Determinants of Analyst Earnings Forecast Accuracy in the International Context written by Huong Ngo Higgins and published by . This book was released on 1998 with total page 170 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Roles that Forecast Surprise and Forecast Error Play in Determining Management Forecast Precision by : Jong-Hag Choi
Download or read book The Roles that Forecast Surprise and Forecast Error Play in Determining Management Forecast Precision written by Jong-Hag Choi and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Studying the determinants of management forecast precision is important because a better understanding of the factors affecting management's choice of forecast precision can provide investors and other users with cues about the characteristics of the information contained in the forecasts. In addition, as regulators assess the regulation of voluntary management disclosures, they need to better understand how managers choose among forecast precision disclosure alternatives. Using 16,872 management earnings forecasts collected from 1995 through 2004, we provide strong evidence that forecast precision is negatively associated with the magnitude of the forecast surprise and that this negative association is stronger when the forecast is bad news than when it is good news. We also find that forecast precision is negatively associated with the absolute magnitude of the forecast error that proxies for the forecast uncertainty that managers face when they issue forecasts, and that the negative association is stronger when forecast errors are negative. These results are consistent with greater liability concerns related to bad news forecasts and negative forecast errors, respectively. Our study provides educators and researchers with important insights into management's choice of earnings forecast precision, which is a component of the voluntary disclosure process that is not well understood.
Book Synopsis Understanding Analysts' Reactions to Earnings Management by : Yuyan Guan
Download or read book Understanding Analysts' Reactions to Earnings Management written by Yuyan Guan and published by . This book was released on 2006 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis examines the determinants of analysts' reactions to firms' earnings management. I present a model showing that analysts revise their forecasts according to their forecast errors revealed by earnings announcements and reporting biases embedded in reported earnings. The model further demonstrates that the relationship between forecast revisions and reporting biases can be affected by analysts' forecasting ability, the inherent uncertainty of whether reporting biases have occurred, as well as analysts' incentives. To empirically test the model's prediction regarding analysts' forecasting ability, I use analysts' firm-specific experience, size of their brokerage firm, and the number of industries they follow as proxies. Consistent with the model's prediction, I provide evidence showing that well-experienced analysts adjust more for earnings management while analysts following a greater number of industries adjust less for earnings management. Sensitivity analysis using analyst's historical firm-specific forecast accuracy as an alternative measure of forecasting ability further supports the hypothesis that analysts with better forecasting ability adjust more for earnings management. Moreover, analysts adjust less for earnings management when the inherent uncertainty of the reporting bias is greater. Specifically, analysts adjust less for earnings management when: (1) the past volatility of discretionary accruals is high; and (2) the firm has a marked propensity to smooth earnings. There is little evidence that affiliated analysts adjust less for earnings management than unaffiliated analysts. However, analysts adjust more for earnings management in the post-Reg FD period than in the pre-Reg FD period, which is consistent with Regulation FD achieving its objective of strengthening analysts' incentives to issue unbiased forecasts.
Book Synopsis Misstated Quarterly Earnings, Alternative Information, and Financial Analyst Earnings Forecast Revisions by : Michael L. Ettredge
Download or read book Misstated Quarterly Earnings, Alternative Information, and Financial Analyst Earnings Forecast Revisions written by Michael L. Ettredge and published by . This book was released on 1993 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Determinants of the Incidence and Precision of Earnings Forecasts by : Jacob Nelson
Download or read book Determinants of the Incidence and Precision of Earnings Forecasts written by Jacob Nelson and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I investigate two related aspects of corporate disclosure of earnings forecasts. Specifically, I empirically model managers' disclosure decisions as a sequential choice: managers first decide whether to publicly issue an earnings forecast and, if they decide to disclose, they choose the precision with which to make this disclosure. I classify point forecasts as the most precise, and all other forecasts as less precise. I estimate dichotomous choice logistic regressions for each of these decisions. I examine the effect of both capital market and product market considerations on these two aspects of the disclosure decision. Broadly, the analysis suggests that while capital market considerations are the primary determinant of the decision to disclose, product market considerations appear to be important in determining disclosure precision. In particular, disclosure precision appears to be decreasing (increasing) in proprietary costs for good (bad) news firms. This study adds to recent analytical and empirical research on the influence of product market considerations on disclosure decisions.
Book Synopsis Earnings Expectations by : William Kross
Download or read book Earnings Expectations written by William Kross and published by . This book was released on 1987 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on Analyst Earnings Forecast by : Wenjuan Xie
Download or read book Three Essays on Analyst Earnings Forecast written by Wenjuan Xie and published by . This book was released on 2008 with total page 138 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Determinants of the Accuracy of Analysts' Earnings Forecasts by : Svetlana Mira
Download or read book The Determinants of the Accuracy of Analysts' Earnings Forecasts written by Svetlana Mira and published by . This book was released on 2005 with total page 672 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis International Variation in Accounting Measurement Rules and Analysts' Earnings Forecast Errors by : Sudipta Basu
Download or read book International Variation in Accounting Measurement Rules and Analysts' Earnings Forecast Errors written by Sudipta Basu and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We theorize that accounting systems affect analysts' forecast accuracy through changes in earnings variability. We argue that the matching and historical cost principles reduce earnings variability, and hence, reduce analysts' earnings forecast errors. We also argue that restricting the choice of accounting methods can result in larger forecast errors. We argue that more informative disclosure environments should reduce forecast errors. We test whether variation in these factors across countries explain variation in analysts' earnings forecast bias and accuracy. Our results indicate that these characteristics of financial accounting systems are complements, and that they affect financial analysts' earnings forecast errors.
Book Synopsis An Empirical Study of Financial Analysts Earnings Forecast Accuracy by : Andrew Stotz
Download or read book An Empirical Study of Financial Analysts Earnings Forecast Accuracy written by Andrew Stotz and published by . This book was released on 2017 with total page 122 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past 12 years, financial analysts across the world have been optimistically wrong with their 12-month earnings forecasts by 25.3%. This study may be the first of its kind to assess analyst earnings forecast accuracy at all listed companies across the globe, covering 70 countries. A review of prior research shows little uniformity in the preparation of the data set, yet differences in how outliers are treated, for example, can create substantially different results. This research lays out six specific steps to prepare the data set before any analysis is done.Three main conclusions come from this research: First, analyst earnings forecasts globally were 25.3% optimistically wrong, meaning on average, analysts started each year forecasting company profits of US$125, but 12 months later that company reported profits of US$100. Second, analysts had a harder time forecasting earnings for companies in emerging markets, where they were 35% optimistically wrong. Third, that analyst optimism mainly occurred when the companies they forecasted experienced very low levels of actual earnings growth, analysts did not make an equal, but opposite error for fast growth companies.
Book Synopsis Uncertainty About Future Earnings as a Determinant of Bias in Analysts'Earnings Forecasts by : Bong-Heui Han
Download or read book Uncertainty About Future Earnings as a Determinant of Bias in Analysts'Earnings Forecasts written by Bong-Heui Han and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Researchers have identified numerous factors associated with security analysts' optimistic bias, including size, earnings-to-price ratio, forecast dispersion, past returns, and past forecast errors. These factors are viewed as having future earnings uncertainty as a common attribute. Empirical evidence consistent with this view is presented. Using these factors as proxies for future earnings uncertainty, univariate tests show that analysts' bias increases as uncertainty increases. Multivariate tests indicate that each of the uncertainty proxies incrementally explains bias, after controlling for the other variables. A model is developed which significantly improves accuracy by reducing both forecast bias and forecast error variance in tests on holdout samples.
Book Synopsis On the Determinants of Analyst Forecast Error by : William Kross
Download or read book On the Determinants of Analyst Forecast Error written by William Kross and published by . This book was released on 1981 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Dynamics of Earnings Forecast Management by : Dan Bernhardt
Download or read book The Dynamics of Earnings Forecast Management written by Dan Bernhardt and published by . This book was released on 2003 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates whether firms manage analyst forecasts to generate positive earnings surprises and the consequences of such forecast management. We first document that firms quot;talk downquot; forecasts. Forecasts of quarterly earnings issued later in the forecasting horizon grow increasingly pessimistic on average. More importantly, the exact timing of changes in earnings forecasts turn out to be a key determinant of whether a firm indeed succeeds at generating positive earnings surprises. In particular, (i) changes in consensus early in the forecast horizon have no effect on the probability that earnings will exceed the consensus, (ii) late forecasts that raise the consensus sharply reduce the probability of a positive earnings surprise, and (iii) late forecasts that lower the consensus sharply raise the probability of a positive earnings surprise. These last two findings are the opposite of what would be predicted if deviations of late forecasts from the consensus were due to new information arrival. We then find evidence that investors are systematically quot;misledquot; by late arriving forecasts. In particular, downward revisions in the consensus lead to large positive cumulative abnormal returns following the earnings announcement. Finally, while the finding that investors reward firms that successfully manage forecasts down might seem to provide a rationale for downward forecast management, this is not so. Specifically, controlling for the extant earnings-consensus forecast differential, the negative impact of downward forecast revisions on stock price dominates the stock price appreciation following the earnings announcement. This begs the question: Firms manage analyst forecasts (down), but why?
Book Synopsis Forecasting Earnings Per Share by : Gerardine DeSanctis
Download or read book Forecasting Earnings Per Share written by Gerardine DeSanctis and published by . This book was released on 1987 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt:
