Team Earnings Forecasting

35 Pages Posted: 22 Sep 2005 Last revised: 1 Apr 2014

See all articles by Lawrence D. Brown

Lawrence D. Brown

Temple University - Department of Accounting

Artur Hugon

Arizona State University (ASU)

Date Written: January 2008

Abstract

While brokerage houses use both teams of sell-side analysts and individual analysts to conduct earnings research, there is no empirical research examining if teams and individuals differ with regard to their forecasting performance or purpose, and if so, how and why. We first examine the most-often researched dimension of forecasting performance, earnings forecast accuracy, and we show that teams are less accurate than individual analysts in general and their own individual team members in particular. We conjecture that teams focus their efforts on an alternative dimension of forecasting performance, timeliness, and we show that team forecasts are timelier than those of individual analysts in general and their own individual team members in particular. Consistent with the notion that teams trade-off forecast accuracy for timeliness to comply with a market research demand, we show that team forecast revisions are associated with larger market responses than those of individuals. Finally, we shed light on the nature of team assignments by documenting that the firms teams follow are in greater financial distress (representing a greater need for timely information) and larger (representing a larger forecasting task).

Keywords: Teams, Earnings forecasts, Accuracy, Timeliness

JEL Classification: G29, M41, J33

Suggested Citation

Brown, Lawrence D. and Hugon, Artur, Team Earnings Forecasting (January 2008). Review of Accounting Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=755824 or http://dx.doi.org/10.2139/ssrn.755824

Lawrence D. Brown

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States

Artur Hugon (Contact Author)

Arizona State University (ASU) ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
661
Abstract Views
3,974
rank
39,541
PlumX Metrics