Rounding of analyst forecasts

• 成果类型: Article
• 署名作者: Herrmann, D; Thomas, WB
• 署名单位: Baylor University; University of Oklahoma System; University of Oklahoma - Norman
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2005.80.3.805
• 发表日期: 2005
• 页码: 805-823
• 关键词: EARNINGS FORECASTS; INFORMATION; accuracy; time; incentives; revisions; proxies; tests; FIRMS

摘要

We find that analyst forecasts of earnings per share occur in nickel intervals at a much greater frequency than do actual earnings per share. Analysts who round their earnings per share forecasts to nickel intervals exhibit characteristics of analysts who are less informed, exert less effort, and have fewer resources. Rounded forecasts are less accurate and the negative relation between rounding and forecast accuracy increases as the rounding interval increases from nickel to dime, quarter, half-dollar, and dollar. An examination of announcement period returns reveals that market expectations more closely align with consensus forecasts including rounded forecasts and then correct toward the more accurate consensus forecasts excluding rounded forecasts. Finally, exclusion of rounded forecasts decreases forecast dispersion.