Do Financial Analysts Generate Value-Relevant Interpretive Information from 10-K Filings?

51 Pages Posted: 15 May 2017

See all articles by Jamie Diaz

Jamie Diaz

College of William and Mary

Kenneth Njoroge

College of William and Mary - Mason School of Business

Philip B. Shane

College of William & Mary; Monash University; Monash University - Department of Accounting

Date Written: May 12, 2017

Abstract

Many papers in the academic and practitioner literature question the value-relevance of sell-side analysts’ interpretation of information in 10-K filings. This paper examines the information content of analysts’ forecast revisions that straddle 10-K filing dates, as compared to the information content of revisions straddling earnings announcement dates. Our evidence suggests that annual earnings forecast accuracy improves more and price discovery takes longer in relation to forecast revisions straddling 10-K filing dates. Our evidence also suggests that analysts underreact to information in 10-K filings to a greater extent than their underreaction to the information released around the time of earnings announcements. These results are consistent with the inference that increased uncertainty created by greater complexity, opacity, and volume of information in 10-K filings causes analysts to react with more restraint than the restraint associated with their reaction to information released around the time of earnings announcements. More generally, our results are consistent with the inference that analysts play an important interpretive role with respect to information in firms’ 10-K filings.

Keywords: Financial Analysts, Earnings Forecast Revisions, 10-K Filings, Value-Relevance, Interpretive Information

JEL Classification: M41, C58, G14

Suggested Citation

Diaz, Jamie and Njoroge, Kenneth and Shane, Philip B., Do Financial Analysts Generate Value-Relevant Interpretive Information from 10-K Filings? (May 12, 2017). Available at SSRN: https://ssrn.com/abstract=2967791 or http://dx.doi.org/10.2139/ssrn.2967791

Jamie Diaz

College of William and Mary ( email )

P.O. Box 8795
Williamsburg, VA 23185
United States
7572212932 (Phone)

Kenneth Njoroge

College of William and Mary - Mason School of Business ( email )

P.O. Box 8795
Williamsburg, VA 23187-8795
United States

Philip B. Shane (Contact Author)

College of William & Mary ( email )

P.O. Box 8795
Williamsburg, VA 23185
United States

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Monash University - Department of Accounting ( email )

H3.43, Building H, Level 3
Monash University Caulfiled
Melbourne, VIC 3145
Australia

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