Meeting Individual Analyst Expectations

49 Pages Posted: 11 Jul 2012 Last revised: 14 Nov 2014

See all articles by Marcus Kirk

Marcus Kirk

University of Florida - Fisher School of Accounting

David A. Reppenhagen

UNCC - Turner School of Accountancy

Jenny Wu Tucker

University of Florida - Warrington College of Business Administration

Date Written: February 10, 2014

Abstract

The expectations management literature has so far focused on firms meeting the analyst consensus forecast — the expectations of analysts as a group — at earnings announcements. In this study we argue that investors may use individual analyst forecasts as additional benchmarks in evaluating reported earnings because the consensus forecast underutilizes private information contained in individual analyst forecasts. We predict that measures reflecting such private information have incremental explanatory power over the consensus forecast for the market’s reaction to earnings news. We find results consistent with this prediction by examining two measures: (1) the percentage of individual forecasts met and (2) meeting the key analyst forecast. We extend the literature by documenting the role of individual analyst forecasts in investors’ evaluations of reported earnings.

Keywords: analyst forecasts, meeting or beating, consensus forecast, individual analysts

JEL Classification: G10, G11, G14, G24

Suggested Citation

Kirk, Marcus and Reppenhagen, David A. and Tucker, Jenny Wu, Meeting Individual Analyst Expectations (February 10, 2014). Accounting Review, 89(6), November 2014: 2203-2231. . Available at SSRN: https://ssrn.com/abstract=2102920 or http://dx.doi.org/10.2139/ssrn.2102920

Marcus Kirk (Contact Author)

University of Florida - Fisher School of Accounting ( email )

Warrington College of Business
PO Box 117166
Gainesville, FL 32611-7166
United States
352-273-0222 (Phone)

David A. Reppenhagen

UNCC - Turner School of Accountancy ( email )

9201 University City Blvd
Charlotte, NC 28223
United States
7046875394 (Phone)

HOME PAGE: http://https://belkcollege.uncc.edu/directory/david-reppenhagen

Jenny Wu Tucker

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States
352-273-0214 (Phone)
352-392-7962 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
241
Abstract Views
1,439
rank
126,868
PlumX Metrics