The Effect of Experience on Security Analyst Underreaction

Posted: 29 Jan 2003 Last revised: 10 Aug 2014


We examine if analysts more fully incorporate prior earnings and returns information in their current quarter forecasts as their experience following a firm increases. We measure analyst firm-specific forecasting experience as the number of prior quarters for which the analyst has issued an earnings forecast for the firm. We find that analysts underreact to prior earnings information less as their experience increases, suggesting one reason why analysts become more accurate with experience.

Keywords: underreaction, experience, earnings forecasts, security analysts

JEL Classification: M41, G14, G29

Suggested Citation

Mikhail, Michael B. and Walther, Beverly R. and Willis, Richard H., The Effect of Experience on Security Analyst Underreaction. Journal of Accounting and Economics, Vol. 35, No. 1, pp. 101-116, April 2003, Available at SSRN:

Michael B. Mikhail (Contact Author)

University of Illinois at Chicago - College of Business Administration ( email )

601 South Morgan Street
11th Floor
Chicago, IL 60607
United States

Beverly R. Walther

Northwestern University - Department of Accounting Information & Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-467-1595 (Phone)
847-467-1202 (Fax)

Richard H. Willis

Vanderbilt University - Accounting ( email )

Nashville, TN 37203
United States
615-343-1050 (Phone)
615-343-7177 (Fax)

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