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New Determinants Of Analysts Earnings Forecast Accuracy
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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 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 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 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 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 On the Properties of Financial Analyst Earnings Forecasts: Some New Evidence by :
Download or read book On the Properties of Financial Analyst Earnings Forecasts: Some New Evidence written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The importance of information in the formation process of security prices has a long history. The dissemination of information can take on different forms depending on the legal constraints. However, in all developed financial markets, financial analysts play a prominent role in collecting, analysing and diffusing information. Financial analysts typically supply future earnings estimates and stock picking advices in the form of recommendations. Earnings estimates are the essential part of security valuation by analysts and investors. They have even become an integral part of financial reporting in the financial press. Early research has accumulated evidence that these estimates are optimistically biased. More recently, empirical studies have found that analysts' optimistic bias is lessening, that its extent differs across analysts, firm characteristics and countries. Broadly speaking, this dissertation investigates the determinants of financial analyst forecasts bias. In the first essay, I examine the relative accuracy of European financial analysts' earnings forecasts and its determinants. I show that the results obtained for US analysts can not be generalised to European analysts who face a seemingly different job market as well as several different institutional and economic environments. In the second essay, I investigate the influence of financial analysts' location on their performance. More precisely, I examine the relative performance of local versus foreign analysts on Latin American stock markets. I find foreign analysts to be more timely and more accurate than their local counterparts. In addition, I document stronger price reactions after foreign analysts' forecast revisions than after those of local analysts. The third essay is related to the declining pattern of financial analyst forecast bias. In particular, I investigate whether US CEOs compensation arrangements give CEOs incentives to manipulate analysts' expectations downward in order to release ea.
Book Synopsis Individual Differences and Analyst Forecast Accuracy by : Wenjuan Xie
Download or read book Individual Differences and Analyst Forecast Accuracy written by Wenjuan Xie and published by . This book was released on 2013 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the impact of unidentifiable individual differences among financial analysts on the cross section of their earnings forecast accuracy. Various psychological factors, such as decision style and personality traits, are documented to impact individuals' decision making. However, analysts' individual differences in such psychological factors are not captured by identifiable personal attributes employed in finance literature, such as years of experience. In this paper, we employ the concept of analyst fixed effects to control for unidentifiable individual differences. Examining the factors related to forecast accuracy, we document that controlling for these unidentifiable analyst-specific effects improves model fitting, and changes the explanatory power of some of the traditionally used independent variables in the literature. We confirm that the analyst's firm-specific experience, the intensity of following that a firm receives, and the forecast horizon are all significantly and consistently related to forecast accuracy. However, we find that analyst general experience and coverage complexity lose explanatory power when individual differences are controlled for. Furthermore, we document that analyst general experience is not monotonically associated with better accuracy, and that analysts only benefit from increased general experience during the early to middle stages of their career. Finally, we observe that when analysts' individual differences are controlled for, the boldness of a forecast revision is no longer a significant determinant of the improvement of accuracy. This is one of the first studies to highlight the necessity of recognizing individual differences among financial analysts. We argue that this treatment advances the literature of analyst forecast performance, and closely relates financial agents' decision making to psychology theories of decision style and personality.
Book Synopsis Factors Affecting the Accuracy of Analysts' Forecasts by : Jahidur Md Rahman
Download or read book Factors Affecting the Accuracy of Analysts' Forecasts written by Jahidur Md Rahman and published by . This book was released on 2020 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study conducts a comprehensive review of the literature published during 1996- 2017 to identify the factors that affect the accuracy of financial analysts' forecasts. We organize our review around three main groups, namely, (a) drivers of analyst forecast accuracy, (b) quality financial reporting, and (c) accounting standards. Among the several factors found, some factors (experience of the analyst, earnings quality, audit quality, IFRS adoption, and annual report readability) have a positive relationship with the accuracy of analysts' forecasts while others (politically connected firms, firms audited by Non-Big 4, and international GAAP differences) have a negative relationship. Our findings contribute to future research by examining the factors affecting analyst forecast accuracy from different perspectives, which will prove to be useful for academicians, regulators, investors, and financial analysts.
Book Synopsis Sophisticated and Unsophisticated Investors' Reactions to Analysts' Forecast Revisions Conditional on Factors that are Associated with Forecast Accuracy by : Sarah E. Bonner
Download or read book Sophisticated and Unsophisticated Investors' Reactions to Analysts' Forecast Revisions Conditional on Factors that are Associated with Forecast Accuracy written by Sarah E. Bonner and published by . This book was released on 2001 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study we examine differences between sophisticated and unsophisticated investors' incorporation of information about the accuracy of sell-side analysts' revisions of quarterly earnings forecasts. Our results indicate that sophisticated investors' weights on information cues associated with accuracy more closely match the weights derived from environmental models of forecast accuracy. Further, our findings suggest that sophisticated investors' strategies better reflect the costs and benefits of using accuracy cues that provide statistically significant, but economically small, explanatory power for forecast accuracy. Our evidence is consistent with sophisticated investors having greater knowledge about the factors that are related to forecast accuracy and exhibiting more adaptive cue-weighting strategies.
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 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 Determinants of Analyst Replacement by : Shin-Rong Shiah-Hou
Download or read book Determinants of Analyst Replacement written by Shin-Rong Shiah-Hou and published by . This book was released on 2016 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: I examine why a brokerage firm replaces an analyst who follows a specific firm for a long run period. Studies exploring regular analyst turnover find earnings forecast accuracy to be a strong factor and suggest that analysts with lower forecast accuracy are more likely to turn over. Thus, the possibility of analyst replacement is higher for analysts with lower earnings forecast accuracy. At the same time, I infer that the brokerage firm is more likely to replace an analyst with a direct competitor in the firm. The better the performance of the direct competitor, the more likely the analyst is replaced. Higher quality analysts (for example, with greater industry experience, higher earnings forecast accuracy, more experience in coverage, or better relationship with the covered firms' executives) likely have a greater chance of survival. The empirical results are consistent with my predictions. I also explore whether the performance of replacement decision is positively related to the increment in quality between the new and the replaced analyst. I find that the performance of replacement decisions is positively related to the increment in quality between the new and the replaced analyst. In addition, the results are not driven the changes in regulations. This study provides new insights into factors that affect the analyst replacement. I demonstrate that the factors that impel brokerage firms to replace, though not fire, an analyst covering a specific firm. The results suggest that analysts need to provide unique and useful guidance to their clients to make themselves indispensible.
Book Synopsis Forecast Accuracy of Individual Analysts by : Patricia C O'Brien
Download or read book Forecast Accuracy of Individual Analysts written by Patricia C O'Brien and published by Legare Street Press. This book was released on 2023-07-18 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides a detailed analysis of the accuracy of forecasts made by individual analysts across nine different industries. It explores the factors that contribute to forecast accuracy and provides insights into how these factors can be used to improve forecasting performance. The author, Patricia C. O'Brien, is a well-respected economist and her research has significant implications for businesses and investors who rely on forecasts in their decision-making processes. This work has been selected by scholars as being culturally important, and is part of the knowledge base of civilization as we know it. This work is in the "public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.
Book Synopsis Determinants of Managerial Earnings Guidance Prior to Regulation Fair Disclosure and Bias in Analysts' Earnings Forecasts by : Amy P. Hutton
Download or read book Determinants of Managerial Earnings Guidance Prior to Regulation Fair Disclosure and Bias in Analysts' Earnings Forecasts written by Amy P. Hutton and published by . This book was released on 2005 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior to Regulation Fair Disclosure (Reg FD) some management spent considerable time and effort guiding analyst earnings estimates, often through detailed reviews of analysts' earnings models. In this paper I use proprietary survey data from the National Investor Relations Institute to identify firms that reviewed analysts' earnings models prior to Reg FD and those that did not. Under the maintained assumption that firms conducting reviews implicitly or explicitly guided analysts' earnings forecasts, I document firm characteristics associated with the decision to provide private managerial earnings guidance. Then, I document the characteristics of 'guided' versus 'unguided' analyst earnings forecasts. Findings demonstrate an association between several firm characteristics and guidance practices: managers are more likely to review analyst earnings models when the firm's stock is highly followed by analysts and largely held by institutions, when the firm's market-to-book ratio is high, and its earnings are important to valuation (high Industry-ERC R2), but hard to predict because its business is complex (high # of Segments). A comparison of guided and unguided quarterly forecasts indicates that guided analyst estimates are more accurate, but also more frequently pessimistic. An examination of analysts' annual earnings forecasts over the fiscal year does not distinguish between guidance and no guidance firms; both experience a quot;walk downquot; in annual estimates. To distinguishing between guidance and no guidance firms, one must examine quarterly earnings news: unguided analysts walk down their annual estimates when the majority of the quarterly earnings news is negative, guided analysts walk down their annual estimates even though the majority of the quarterly earnings news is positive.
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 Rational Inattention and Analyst Forecast Accuracy by : Phong Truong
Download or read book Rational Inattention and Analyst Forecast Accuracy written by Phong Truong and published by . This book was released on 2018 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: Facing limited attention constraints, financial analysts must strategically choose which information to pay attention to and which information to ignore when making earnings forecasts. I rely on rational inattention theory to develop and test hypotheses on factors that determine analyst attention and how analyst attention affects forecast accuracy. I construct a novel measure of attention that varies across stocks followed by the same analyst during the same fiscal period. I find that analyst attention is decreasing in the marginal cost of paying attention and that analysts allocate attention to firms with earnings that are difficult to forecast, suggesting that analysts suffer from a limited attention constraint. Importantly, I find that attentive analysts are more accurate, and the effect of attention is larger for inexperienced analysts and stocks with highly volatile earnings. Finally, I find that attentive analysts are less likely to revise forecasts upwards and are less optimistic even after controlling for firm information environment and analyst ability.
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.
