The Timing of Analysts' Earnings Forecasts

The Accounting Review, Vol. 85, 2010

48 Pages Posted: 2 Jun 2005 Last revised: 28 Dec 2009

See all articles by Ilan Guttman

Ilan Guttman

Leonard N. Stern School of Business, New York University; New York University - Stern Scholl of business

Date Written: June 11, 2009

Abstract

Existing literature assumes that the order and timing of analysts’ earnings forecasts are determined exogenously. However, analysts choose when to issue their forecasts. This study develops a model that endogenizes the timing decision of analysts and analyzes their equilibrium timing strategies. In the model, analysts face a trade-o¤ between the timeliness and the precision of their forecasts. The model introduces a timing game with two analysts, derives and analyzes its unique pure strategies equilibrium, and provides new empirical predictions about the precision and timing of analysts’ forecasts. The equilibrium has one of two patterns: either the times of the analysts’ forecasts cluster, or there is a separation in the times of the forecasts. The less informed and less similar the analysts are, the more likely it is that they forecast at different points in time. All else equal, analysts with a higher precision of initial private information tend to forecast earlier, and analysts with a higher learning ability tend to forecast later.

Keywords: Financial Analysts, Analyst forecast, Timing, Clustering.

JEL Classification: G15, G29

Suggested Citation

Guttman, Ilan, The Timing of Analysts' Earnings Forecasts (June 11, 2009). The Accounting Review, Vol. 85, 2010, Available at SSRN: https://ssrn.com/abstract=733905 or http://dx.doi.org/10.2139/ssrn.733905

Ilan Guttman (Contact Author)

Leonard N. Stern School of Business, New York University ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

New York University - Stern Scholl of business ( email )

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