Whisper Forecasts of Quarterly Earnings Per Share

31 Pages Posted: 7 Apr 1998

See all articles by Mark Bagnoli

Mark Bagnoli

Purdue University

Messod D. Beneish

Indiana University - Kelley School of Business - Department of Accounting

Susan G. Watts

Purdue University

Multiple version iconThere are 2 versions of this paper

Date Written: March 1999


In this paper, we compare First Call analyst forecasts to unofficial forecasts of quarterly earnings per share commonly referred to as whisper forecasts. Our analysis yields the following results. First, we find that whispers are, on average, more accurate than First Call forecasts and are better proxies for market expectations of earnings than are First Call forecasts, consistent with the claim in the professional press that whispers are increasingly becoming the true market expectation of earnings. Second, we show that trading strategies based on the relationship between whisper and First Call forecasts earn abnormal returns. Our results, when considered collectively, suggest that whispers contain information not contained in First Call analyst forecasts and that they appear to be widely enough disseminated so that at least part of this information is incorporated in stock prices prior to the earnings release.

Formally titled "Whispers and Shouts: Forecasts of Quarterly Earnings Per Share"

JEL Classification: G14, M41

Suggested Citation

Bagnoli, Mark E. and Beneish, Messod Daniel and Watts, Susan G., Whisper Forecasts of Quarterly Earnings Per Share (March 1999). Available at SSRN: https://ssrn.com/abstract=74369 or http://dx.doi.org/10.2139/ssrn.74369

Mark E. Bagnoli

Purdue University ( email )

Department of Accounting
West Lafayette, IN 47907-1310
United States
765-494-4484 (Phone)
765-496-1778 (Fax)

Messod Daniel Beneish

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States
812-855-2628 (Phone)
812-855-4985 (Fax)

Susan G. Watts (Contact Author)

Purdue University ( email )

West Lafayette, IN 47906
United States

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