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The Effect of Experience on Security Analyst Underreaction
Michael B. Mikhail Arizona State University - School of Accountancy Beverly R. Walther Northwestern University - Department of Accounting Information & Management Richard H. Willis Vanderbilt University - Owen Graduate School of Management Journal of Accounting and Economics, Vol. 35, No. 1, pp. 101-116, April 2003 Abstract: We examine if analysts more fully incorporate prior earnings and returns information in their current quarter forecasts as their experience following a firm increases. We measure analyst firm-specific forecasting experience as the number of prior quarters for which the analyst has issued an earnings forecast for the firm. We find that analysts underreact to prior earnings information less as their experience increases, suggesting one reason why analysts become more accurate with experience.
Keywords: underreaction, experience, earnings forecasts, security analysts JEL Classifications: M41, G14, G29 Accepted Paper SeriesDate posted: January 29, 2003 ; Last revised: December 16, 2003Suggested CitationContact Information
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