Management Earnings Forecasts and Value of Analyst Forecast Revisions
Management Science, Forthcoming
45 Pages Posted: 31 Jan 2014 Last revised: 21 Feb 2014
Date Written: January 29, 2014
This study examines the stock-price reactions to analyst forecast revisions around earnings announcements to test whether pre-announcement forecasts reflect analysts’ private information or piggybacking on confounding events and news. We find that management earnings forecasts influence the timing and precision of analyst forecasts. More importantly, evidence suggests that prior studies’ finding of weaker (stronger) stock-price responses to forecast revisions in the period immediately after (before) the prior-quarter earnings announcement disappears once management earnings forecasts are controlled for. To the extent that management earnings forecasts are public disclosures, our results suggest that the importance of analysts' information discovery role documented in prior studies is likely to be overstated.
Keywords: analyst forecasts, management earnings forecasts, public disclosure
JEL Classification: G14, G29, M40, M41
Suggested Citation: Suggested Citation