Financial Analysts’ Response After Corporate Earnings Announcements and Forecast Quality

32 Pages Posted: 23 May 2021 Last revised: 10 Jun 2021

See all articles by Andreas Charitou

Andreas Charitou

University of Cyprus

Nikolaos Floropoulos

University Carlos III of Madrid

Date Written: June 10, 2021

Abstract

We create an alternative, simpler definition of analyst forecast timeliness leaders based on their response after the corporate quarterly earnings announcements, examining if these analysts’ forecasts are superior in informativeness and accuracy. Our Earnings Announcement Date Leader classification method of leaders and followers is able to identify superior analysts who provide forecasts of higher quality in all three properties, timeliness, informativeness and accuracy, contrary to prior definitions of timeliness. Furthermore, prior forecast accuracy is positively associated to the forecast informativeness of both leaders and followers, being more important for the former. Our findings are important for investors and other market participants, because they can use the EAD Leader classification to identify superior analysts and, consequently, more informative and accurate forecasts.

Keywords: Earnings forecasts, earnings announcements, financial analysts, information quality

JEL Classification: G14, G17, G24

Suggested Citation

Charitou, Andreas and Floropoulos, Nikolaos, Financial Analysts’ Response After Corporate Earnings Announcements and Forecast Quality (June 10, 2021). Available at SSRN: https://ssrn.com/abstract=3849397 or http://dx.doi.org/10.2139/ssrn.3849397

Andreas Charitou

University of Cyprus ( email )

75 Kallipoleos Street
P.O. Box 20537
Nicosia CY-1678
Cyprus
+357 2 893624 (Phone)
+357 2 895030 (Fax)

Nikolaos Floropoulos (Contact Author)

University Carlos III of Madrid ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

HOME PAGE: http://https://business.uc3m.es/es/faculty/profesor/perfil/nikolaos-floropoulos

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