The Timing and Value of Forecast and Recommendation Revisions: Do Analysts Receive Early Peek at Good News?
49 Pages Posted: 5 Feb 2003
Date Written: November 2002
This paper evaluates the information content of analysts' one-quarter ahead earnings forecast revisions and recommendation revisions at various points in time relative to earnings announcement dates. We conduct three sets of tests to evaluate the information content of revisions. Across all tests, we find that the revisions are least informative in the week after earnings announcements and that the information content of revisions generally increases over event time. We find a sharp increase in the information content of upward forecast revisions and recommendations upgrades, but we do not find a similar increase for downward revisions and recommendation downgrades.
Keywords: Financial markets, Brokerage analysts, Earnings forecasts, Analyst recommendations, Asymmetric and private information
JEL Classification: G14, D82, G24, G28
Suggested Citation: Suggested Citation