Analyst Characteristics, Timing of Forecast Revisions, and Analyst Forecasting Ability

36 Pages Posted: 18 Jan 2011 Last revised: 8 Mar 2011

Yongtae Kim

Santa Clara University - Leavey School of Business

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business

Minsup Song

Sogang University

Multiple version iconThere are 2 versions of this paper

Date Written: November 4, 2010

Abstract

We first examine whether analysts with certain characteristics that prior research has identified are related to superior forecasting ability systematically time their forecast revisions later in the fiscal quarter. We then examine whether this superior ability persists after controlling for this timing advantage by using relative forecast error, a measure that largely eliminates the timing advantage of recent forecasts. Using a sample of quarterly earnings forecast revisions over the 20-year period from 1990 to 2009, we find that analysts with more firm-specific and general experience and more accurate prior-period forecasts, analysts employed by larger brokerage firms, and analysts who follow fewer industries and companies tend to revise forecasts later in the quarter. We also find that analyst characteristics that are positively correlated with revision timing are negatively related to relative forecast errors. These results are consistent with analyst characteristics being useful proxies for analyst forecasting ability and analysts with greater ability revising forecasts later in the quarter.

Keywords: Analyst Earnings Forecasts, Forecast Revisions, Analyst Characteristics, Forecast Timing, Forecasting Ability

JEL Classification: G24, M41, D82

Suggested Citation

Kim, Yongtae and Lobo, Gerald J. and Song, Minsup, Analyst Characteristics, Timing of Forecast Revisions, and Analyst Forecasting Ability (November 4, 2010). SCU Leavey School of Business Research Paper No. 11-04. Available at SSRN: https://ssrn.com/abstract=1742549 or http://dx.doi.org/10.2139/ssrn.1742549

Yongtae Kim (Contact Author)

Santa Clara University - Leavey School of Business ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States
(408) 554-4667 (Phone)
(408) 554-2331 (Fax)

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States
713-743-4838 (Phone)
713-743-4828 (Fax)

HOME PAGE: http://www.bauer.uh.edu/acct/acctprofile.asp?search=Gerald%20Lobo

Minsup Song

Sogang University ( email )

Palaus Hall 802, Sogang Business School
1 Shinsoo-Dong, Mapo-Gu
Seoul
Korea, Republic of (South Korea)
82-2-705-8855 (Phone)

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