Do Analysts Read the News?

61 Pages Posted: 15 Jan 2014 Last revised: 24 May 2016

See all articles by Alan Guoming Huang

Alan Guoming Huang

University of Waterloo

Kaleab Mamo

Wilfrid Laurier University

Date Written: May 1, 2016


We examine whether and how the general supply of firm information via media news sources influences equity analysts' earnings forecast revisions (EFRs). Combining large databases of U.S. firm-specific public news stories and individual sell-side equity analysts' EFRs from 2000 to 2010, we find that equity analysts' EFRs are significantly influenced by the tone of the news. The relation between news and EFRs is stronger when the news contains information regarding firm fundamentals. We also find that media news influences analysts' forecast revision more when firm information asymmetry is larger and when analysts face stronger conflicts of interest. However, they generally respond to news with a lag; consequently, the market reacts less favorably when analysts' revisions are based on stale news.

Keywords: Sell-side analysts, Business media, Public news, Earnings forecast revisions

Suggested Citation

Huang, Alan G. and Mamo, Kaleab, Do Analysts Read the News? (May 1, 2016). 2014 Canadian Academic Accounting Association (CAAA) Annual Conference, Available at SSRN: or

Alan G. Huang

University of Waterloo ( email )

School of Accounting and Finance
Waterloo, Ontario N2L 3G1
519-888 4567 ext. 36770 (Phone)

Kaleab Mamo (Contact Author)

Wilfrid Laurier University ( email )

75 University Ave W
Waterloo, Ontario N2L 3C5
5198841970 (Phone)

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