Customer Value Disclosure and Analyst Forecasts: The Influence of Environmental Dynamism

35 Pages Posted: 8 Feb 2013

See all articles by Marie-Josée Ledoux

Marie-Josée Ledoux

affiliation not provided to SSRN

Denis Cormier

University du Quebec a Montreal

Sylvain Houle

affiliation not provided to SSRN

Date Written: February 8, 2013

Abstract

In this paper, we study the economic benefits of a pro-active disclosure strategy in a dynamic environment. More specifically, we explore the relationships between customer value disclosure, analyst following, and earnings forecasts, taking into account environmental dynamism as captured by R&D intensity, sales variability and competition. Controlling for endogeneity, we rely on regression estimations to test the hypotheses. First, results show that customer value disclosure is positively associated with analyst following and consensus in analyst earning forecasts. Second, environmental dynamism enhances the association between customer value disclosure and analyst following as well as consensus among analysts. Those results suggest that customer metrics attract analysts and improve their ability to forecast earnings. Moreover, customer value disclosure appears particularly relevant for forecasting earnings of firms involved in dynamic environments. Our findings reveal that the relations between customer value disclosure, analyst following and analyst forecasts are not straightforward but are affected by a firm’s environmental uncertainty.

Keywords: Analyst following, analyst forecasts, customer value disclosure, environmental dynamism

Suggested Citation

Ledoux, Marie-Josée and Cormier, Denis and Houle, Sylvain, Customer Value Disclosure and Analyst Forecasts: The Influence of Environmental Dynamism (February 8, 2013). CAAA Annual Conference 2013. Available at SSRN: https://ssrn.com/abstract=2213819 or http://dx.doi.org/10.2139/ssrn.2213819

Marie-Josée Ledoux (Contact Author)

affiliation not provided to SSRN ( email )

Denis Cormier

University du Quebec a Montreal ( email )

P.O. Box 8888, Downtown Station
Succursale Centre Ville School of Management 315 rue Ste-Catherine Est
Montreal, Quebec H3C 3P8
Canada
514-987-3000, ext. 8358 (Phone)
514-987-6629 (Fax)

Sylvain Houle

affiliation not provided to SSRN ( email )

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