Earnings-Related Information Transfers and Revisions in Earnings Expectations

Posted: 21 Jul 1997

See all articles by Sundaresh Ramnath

Sundaresh Ramnath

University of Miami - Department of Accounting

Date Written: May 1997

Abstract

This paper examines the revisions in earnings expectations for non-announcing firms following the earnings announcements of related firms. Specifically, using quarterly earnings data I examine whether such revisions are predictable based on the information released by the announcing firm. Results of the study indicate that the correlation in forecast errors of announcing and non- announcing firms from previous quarters can be used to predict the revisions in earnings expectations of financial analysts and investors around the earnings announcement dates of related firms. Consistent with prior research documenting analyst under-reaction to publicly available information, I also find that analysts' forecast revisions that follow the early announcements do not seem to completely incorporate earnings-related information available from early-announcers in the group. An additional finding is that grouping firms based on patterns in analyst following yields more homogenous sets of firms than classifications based on four-digit SIC codes.

JEL Classification: G29, M41, L10, C81

Suggested Citation

Ramnath, Sundaresh, Earnings-Related Information Transfers and Revisions in Earnings Expectations (May 1997). Available at SSRN: https://ssrn.com/abstract=8543

Sundaresh Ramnath (Contact Author)

University of Miami - Department of Accounting ( email )

Coral Gables, FL 33146-6531
United States
305-284-6668 (Phone)

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