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Explaining the Surprising Performance of Whisper Forecasts of Earnings

57 Pages Posted: 27 Aug 2008  

Susan M. Machuga

University of Hartford

Karen Teitel

College of the Holy Cross

Ray J. Pfeiffer Jr.

Texas Christian University - Neeley School of Business

Date Written: July 22, 2008

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

Suggested Citation

Machuga, Susan M. and Teitel, Karen and Pfeiffer, Ray J., Explaining the Surprising Performance of Whisper Forecasts of Earnings (July 22, 2008). Available at SSRN: https://ssrn.com/abstract=1245462 or http://dx.doi.org/10.2139/ssrn.1245462

Susan Machuga

University of Hartford ( email )

200 Bloomfield Avenue
West Hartford, CT 06117
United States

Karen Teitel (Contact Author)

College of the Holy Cross ( email )

1 College Street
Worcester, MA 01610-2395
United States

Ray Pfeiffer

Texas Christian University - Neeley School of Business ( email )

TCU Box 298530
Fort Worth, TX 76129
United States
817-257-6435 (Phone)

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