Bold Security Analysts' Earnings Forecasts and Managers' Information Flow

34 Pages Posted: 7 Sep 2004

See all articles by Allen H. Huang

Allen H. Huang

Hong Kong University of Science and Technology - Department of Accounting

Richard H. Willis

Vanderbilt University - Accounting

Amy Zang

Hong Kong University of Science and Technology - Department of Accounting

Date Written: January 2005

Abstract

We examine the relation between security analysts' annual earnings forecast boldness ("bold analysts") and changes in the inferred flow of earnings-related information from managers of the forecasted firm to bold analysts. We find that unfavorably bold analysts experience an improvement in their subsequent relative forecast accuracy. Favorable forecasters, however, experience a decrease in subsequent relative forecast accuracy. Our forecast revisions tests suggest that the market recognizes the improvement in subsequent relative forecast accuracy for unfavorably bold analysts and places no additional weight on forecast revisions from favorably bold analysts.

Keywords: Management communication, Earnings forecasts, Security analysts

JEL Classification: M41, G12, G14, G29

Suggested Citation

Huang, Allen H. and Willis, Richard H. and Zang, Amy, Bold Security Analysts' Earnings Forecasts and Managers' Information Flow (January 2005). Available at SSRN: https://ssrn.com/abstract=587951 or http://dx.doi.org/10.2139/ssrn.587951

Allen H. Huang

Hong Kong University of Science and Technology - Department of Accounting ( email )

LSK Business School Building
HKUST
Clear Water Bay, Kowloon
Hong Kong

HOME PAGE: http://www.AllenHuang.org

Richard H. Willis (Contact Author)

Vanderbilt University - Accounting ( email )

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

Amy Zang

Hong Kong University of Science and Technology - Department of Accounting ( email )

LSK Business School Building
Clear Water Bay, Kowloon
Hong Kong
+852-23587561 (Phone)

HOME PAGE: http://www.AmyZang.org

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