Do financial analysts' long-term growth forecasts matter? Evidence from stock recommendations and career outcomes
AbstractPrior literature portrays long-term growth (LTG) forecasts as nonsensical from a valuation perspective. Instead, we hypothesize that LTG forecasts signal high effort and ability to analyze firms' long-term prospects. We document stronger market response to stock recommendation revisions of analysts who publish accompanying LTG forecasts. We also hypothesize and find that these analysts are less likely to leave the profession or move to smaller brokerage houses. Consistent with Reg. FD's intention to promote fundamental analysis of long-term earnings prospects, post-Reg. FD observations drive our results. Overall, we identify previously undocumented benefits accruing to analysts who publish LTG forecasts.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Accounting and Economics.
Volume (Year): 53 (2012)
Issue (Month): 1 ()
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Financial analysts; Long-term growth; Analysts' forecasts; Analysts' career outcomes; Value-relevance; Stock recommendations;
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- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
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