Understanding analysts' use of stock returns and other analysts' revisions when forecasting earnings
AbstractWe investigate analysts' use of stock returns and other analysts' forecast revisions in revising their own forecasts after an earnings announcement. We find that analysts respond more strongly to these signals when the signals are more informative about future earnings changes. Although analysts underreact to these signals on average, we find that analysts who are most sensitive to signal informativeness achieve superior forecast accuracy relative to their peers and have a greater influence on the market. The results suggest that the ability to extract information from the actions of others serves as one source of analyst expertise.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Accounting and Economics.
Volume (Year): 51 (2011)
Issue (Month): 3 (April)
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Web page: http://www.elsevier.com/locate/jae
Financial analysts Earnings forecasts Market efficiency Learning;
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- Bert de Bruijn & Philip Hans Franses, 2013. "Forecasting Earnings Forecasts," Tinbergen Institute Discussion Papers 13-121/III, Tinbergen Institute.
- Bert de Bruijn & Philip Hans Franses, 2012. "What drives the Quotes of Earnings Forecasters?," Tinbergen Institute Discussion Papers 12-067/4, Tinbergen Institute.
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