Earnings Announcement Disclosures and Changes in Analysts' Information
45 Pages Posted: 24 Oct 2015 Last revised: 9 Sep 2016
Date Written: July 2016
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: Suggested Citation