Analyst Reputation and the Issuance of Disaggregated Earnings Forecasts to I/B/E/S

43 Pages Posted: 10 Jan 2008 Last revised: 23 Sep 2012

See all articles by Yonca Ertimur

Yonca Ertimur

University of Colorado at Boulder - Department of Accounting

William J. Mayew

Duke University - Fuqua School of Business

Stephen Stubben

University of Utah

Date Written: August 1, 2009

Abstract

Although sell-side analysts privately forecast revenues and expenses when producing earnings forecasts, not all analysts choose to provide I/B/E/S with earnings forecasts disaggregated into revenues and expenses. We investigate the role of reputation in explaining this decision. We find that analysts without established reputations are more likely than reputable analysts to issue disaggregated earnings forecasts to I/B/E/S, consistent with I/B/E/S exposure benefits accruing to analysts seeking to establish a reputation. Among less reputable analysts, those with high ability are more likely to disaggregate, consistent with this group reaping greater benefits from the exposure I/B/E/S provides. Additional tests support our primary hypotheses. Among less reputable analysts, those who disaggregate are more (less) likely to be promoted (demoted or terminated). The stock market responds similarly, with more weight assigned to earnings forecast revisions provided by analysts who disaggregate their earnings forecasts.

Keywords: Disaggregated earnings forecasts, Revenue forecasts, Security analysts, Reputation

JEL Classification: D83, G14, J44

Suggested Citation

Ertimur, Yonca and Mayew, William J. and Stubben, Stephen, Analyst Reputation and the Issuance of Disaggregated Earnings Forecasts to I/B/E/S (August 1, 2009). Available at SSRN: https://ssrn.com/abstract=1081463 or http://dx.doi.org/10.2139/ssrn.1081463

Yonca Ertimur

University of Colorado at Boulder - Department of Accounting ( email )

419 UCB
Boulder, CO 80309-0419
United States

William J. Mayew (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7781 (Phone)
919-660-7971 (Fax)

HOME PAGE: http://www.fuqua.duke.edu/faculty/alpha/mayew.htm

Stephen Stubben

University of Utah ( email )

1655 E. Campus Center
Salt Lake City, UT 84112
United States

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