An Empirical Examination of the Divergence between Managers' and Analysts' Earnings Forecasts

• 成果类型: Article
• 署名作者: Das, Somnath; Kim, Kyonghee; Patro, Sukesh
• 署名单位: University of Illinois System; University of Illinois Chicago; University of Illinois Chicago Hospital; Michigan State University; Northern Illinois University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12351
• 发表日期: 2017
• 页码: 2123-2151
• 关键词: information-content; SECURITY RETURNS; Market returns; bad-news; errors; experience; guidance; FIRMS; price; underreaction

摘要

We study circumstances when analysts' forecasts diverge from managers' forecasts after management guidance, and the consequences of this divergence for investors and analysts. Our results show that investors' return response to earnings surprises based on analyst forecasts is significantly weaker when analyst and management forecasts diverge, and that this attenuating effect is stronger when the management forecast is more credible. When the divergent management forecast is more accurate than the analyst consensus forecast, the subsequent-quarter analyst consensus forecast is significantly more accurate than that of the current quarter, and exhibits less serial correlation. Overall, our findings suggest that, when analyst and management forecasts diverge, investors find the two sources to contain complementary information, and analysts learn to improve their subsequent forecasts.