Document Type
Article
Publication Date
7-2015
Publisher
INFORMS
Abstract
This study examines the stock-price reactions to analyst forecast revisions around earnings announcements to test whether preannouncement forecasts reflect analysts' private information or piggybacking on confounding events and news. We find that management earnings forecasts influence the timing and precision of analyst forecasts. More importantly, evidence suggests that prior studies' finding of weaker (stronger) stock-price responses to forecast revisions in the period immediately after (before) the prior-quarter earnings announcement disappears once management earnings forecasts are controlled for. To the extent that management earnings forecasts are public disclosures, our results suggest that the importance of analysts' information discovery role documented in prior studies is likely to be overstated.
Recommended Citation
Kim, Yongtae, and Minsup Song. "Management Earnings Forecasts and Value of Analyst Forecast Revisions." Management Science 61.7 (2015): 1663-683.
Comments
This is the authored accepted version. Published version can be found here - http://dx.doi.org/10.1287/mnsc.2014.1920.