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The Timing and Value of Forecast and Recommendation Revisions: Do Analysts Receive Early Peek at Good News?

Zoran Ivkovich
Michigan State University, Department of Finance

Narasimhan Jegadeesh
Emory University - Department of Finance

November 2002

AFA 2004 San Diego Meetings

Abstract:
This paper evaluates the information content of analysts' one-quarter ahead earnings forecast revisions and recommendation revisions at various points in time relative to earnings announcement dates. We conduct three sets of tests to evaluate the information content of revisions. Across all tests, we find that the revisions are least informative in the week after earnings announcements and that the information content of revisions generally increases over event time. We find a sharp increase in the information content of upward forecast revisions and recommendations upgrades, but we do not find a similar increase for downward revisions and recommendation downgrades.

Keywords: Financial markets, Brokerage analysts, Earnings forecasts, Analyst recommendations, Asymmetric and private information

JEL Classifications: G14, D82, G24, G28

Working Paper Series

Date posted: February 05, 2003 ; Last revised: November 11, 2003

Suggested Citation

Jegadeesh, Narasimhan and Ivkovich, Zoran, The Timing and Value of Forecast and Recommendation Revisions: Do Analysts Receive Early Peek at Good News? (November 2002). AFA 2004 San Diego Meetings. Available at SSRN: http://ssrn.com/abstract=359320 or doi:10.2139/ssrn.359320

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Contact Information

Zoran Ivkovich (Contact Author) Michigan State University, Department of Finance ( email ) 315 Eppley Center East Lansing, MI 48824-1122 United States
Narasimhan Jegadeesh Emory University - Department of Finance ( email ) Atlanta, GA 30322-2710 United States