Explaining the Surprising Performance of Whisper Forecasts of Earnings

Abstract

Whisper numbers have attracted both popular press and academic interest since at least 1998, when Whispernumbers.com was established. Nearly all academic research to date has focused on the accuracy and representativeness of whispers relative to financial analysts' earnings forecasts and has found that in some circumstances, whisper forecasts are more accurate and/or more closely associated with investors' expectations than are financial analysts' forecasts. In this paper we find that the surprisingly strong performance of whisper forecasts says more about relative weakness in analysts' forecasts in certain contexts than relative strength of whispers.

Keywords: whisper forecasts, analysts forecasts, management forecasts, forecast accuracy, forecast information content

JEL Classification: C12, C23, G14, M41, G29