Other comprehensive income, its components, and analysts' forecasts

• 成果类型: Article
• 署名作者: Anderson, Joshua; Cao, Yiting; Riedl, Edward J.; Song, Scarlett Xiaotong
• 署名单位: California State University System; California Polytechnic State University San Luis Obispo; California State University System; California State University Los Angeles; Boston University; University System Of New Hampshire; University of New Hampshire
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-021-09656-y
• 发表日期: 2023
• 页码: 792-826
• 关键词: information uncertainty; net income; fair-value; expectations; performance; losses; gains

摘要

This paper examines how analysts incorporate other comprehensive income (OCI) and its components into their earnings forecasts. We first document that analysts' 1-year-ahead earnings forecasts are associated with OCI and OCI components having predictive ability; this suggests analysts (at least partially) incorporate this information into their forecasting. We then show that analysts are neither complete nor timely in incorporating OCI information into their forecasts, as several OCI components remain associated with analysts' forecast errors. Further, we document that higher uncertainty in firm performance exacerbates analysts' underreaction, evidencing a friction to full incorporation of OCI-related information. Finally, as evidence of where and when analysts derive OCI-related information, we document that analysts' forecast revisions correlate with the release of firms' 10-Ks and early 10-Qs (i.e., quarters one and two but not three).