Earnings Announcement Disclosures and Changes in Analysts' Information

45 Pages Posted: 24 Oct 2015 Last revised: 9 Sep 2016

See all articles by Orie E. Barron

Orie E. Barron

Pennsylvania State University

Donal Byard

City University of New York - Stan Ross Department of Accountancy

Yong Yu

University of Texas at Austin

Date Written: July 2016

Abstract

This study examines how financial disclosures made with earnings announcements affect analysts’ information about future earnings, focusing on disclosures of financial statements and management earnings forecasts. We find that disclosures of balance sheets and segment data are associated with an increase in the degree to which analysts' forecasts of upcoming quarterly earnings are based on private information. Further analyses show that balance sheet disclosures are associated with an increase in the precision of both analysts' common and private information, segment disclosures are associated with an increase in analysts' private information, and management earnings forecast disclosures are associated with an increase in analysts’ common information. These results are consistent with analysts processing balance sheet and segment disclosures into new private information regarding near-term earnings. Additional analysis of conference calls shows that balance sheet, segment, and management earnings forecast disclosures are all associated with more discussion related to these items in the questions-and-answers section of conference calls, consistent with analysts playing an information interpretation role with respect to these disclosures.

Keywords: Analysts' forecasts, disclosures, earnings announcements, conference calls

JEL Classification: M41, M45, G29

Suggested Citation

Barron, Orie E. and Byard, Donal A. and Yu, Yong, Earnings Announcement Disclosures and Changes in Analysts' Information (July 2016). Contemporary Accounting Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1013585 or http://dx.doi.org/10.2139/ssrn.1013585

Orie E. Barron

Pennsylvania State University ( email )

University Park, PA 16802-3306
United States
814-863-3230 (Phone)
814-863-8393 (Fax)

Donal A. Byard (Contact Author)

City University of New York - Stan Ross Department of Accountancy ( email )

One Bernard Baruch Way, Box B12-225
New York, NY 10010
United States
646-312-3187 (Phone)
646-312-3161 (Fax)

Yong Yu

University of Texas at Austin ( email )

1 University Station B6400
Austin, TX 78712
United States
(512)471-6714 (Phone)
(512)471-3904 (Fax)

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