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Paper Stats:
Abstract Views: 599
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Analyst Underreaction in the United Kingdom
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CONSTANTINA CONSTANTINOU
Philips College - Department of Accounting and Finance
WILLIAM FORBES
Loughborough University - Business School
LEN SKERRATT
Brunel University - Economics and Finance; Philips College; Kingston University - Kingston Business School
Financial Management, Vol. 32, No. 2, Summer 2003
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Abstract:
We revisit the debate on the interpretation given to prior-year earnings changes in predicting analysts' future forecast errors. We advance a new specification of this relation that distinguishes between earnings reversion and momentum. For a large UK dataset for the years 1990-1996, we find substantial underreaction, particularly in situations of earnings momentum. We find that underreaction is further increased for cases of downward earnings momentum when the analyst's merchant bank acts as a broker to the company. We interpret this as a reporting bias caused by an analyst's response to bad news being compromised.
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Accepted Paper Series
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Contact Information for
LEN
SKERRATT
(Contact Author)
Email address for LEN
SKERRATT
Brunel University - Economics and Finance
Uxbridge UB8 3PH
United Kingdom
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(No e-mail address available for LEN
SKERRATT
Philips College
Nicosia
Cyprus
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(No e-mail address available for LEN
SKERRATT
Kingston University - Kingston Business School
Kingston Hill
Kingston upon Thames
Surrey KT2 7LB
United Kingdom
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Contact Information for
CONSTANTINA
CONSTANTINOU
Email address for CONSTANTINA
CONSTANTINOU
Philips College - Department of Accounting and Finance
CY-2100 Nicosia
Cyprus
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Contact Information for
WILLIAM
FORBES
Email address for WILLIAM
FORBES
Loughborough University - Business School
Ashby Road
Loughborough
Nottingham NG1 4BU
Great Britain
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Email Abstract or URL
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