Are Analysts’ Forecasts Informative to the General Public?

Management Science, Forthcoming

30 Pages Posted: 23 Mar 2009 Last revised: 5 Sep 2013

See all articles by Oya Altinkilic

Oya Altinkilic

University of Maryland - Robert H. Smith School of Business

Vadim S. Balashov

Rutgers School of Business-Camden

Robert S. Hansen

Tulane University - A.B. Freeman School of Business

Date Written: December 2012

Abstract

Contrary to the common view that analysts are important information agents, intraday returns evidence shows that announcements of analysts’ forecast revisions release little new information, on average. Further cross-sectional evidence from returns around the announcements confirms that revisions are virtually information-free. Daily announcement returns used in the literature appear to overstate the analyst’s role as information agent, because forecast announcements often are issued directly after reports of significant news about the followed firm. The evidence reveals a sequential relationship between events and news and forecast revisions indicative of analyst piggybacking, not prophecy. These new findings about the most sought-after analyst report broaden significantly the evidence indicating that price reactions to analysts’ reports reveal little new information.

Keywords: Analysts, Analysts' forecasts, Analysts' under/overreaction to information, Brokerage research, Capital markets, Contrarian strategies, Efficient markets, Financial markets, Information production, Market efficiency, Momentum effects, Post-earnings announcement drift, Sell-side analysts

JEL Classification: D82, G11, G12, G14, G24, G28, K22, M41

Suggested Citation

Altinkilic, Oya and Balashov, Vadim S. and Hansen, Robert S., Are Analysts’ Forecasts Informative to the General Public? (December 2012). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1364859 or http://dx.doi.org/10.2139/ssrn.1364859

Oya Altinkilic

University of Maryland - Robert H. Smith School of Business ( email )

4426 Van Munching Hall
Department of Finance
College Park, MD 20742
United States

Vadim S. Balashov

Rutgers School of Business-Camden ( email )

Camden, NJ 08102
United States
856-225-6706 (Phone)

Robert S. Hansen (Contact Author)

Tulane University - A.B. Freeman School of Business ( email )

Goldring/Woldenberg Hall
7 McAllister Blvd.
New Orleans, LA 70118
United States
504-865-5624 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
946
Abstract Views
5,374
rank
23,643
PlumX Metrics