Prior studies provide only limited evidence on how and why investors rely on analyst forecasts. We investigate one aspect of this research paradigm by examining investor response to analyst forecast revisions using accounting restatements as a proxy for uncertainty. We find that investors tend to rely more on the information that analyst characteristics convey about forecast accuracy in restatement firms than in non-restatement firms. The evidence also suggests that the level of restatement intensity and the length of reaction window affect investors' reliance on these characteristics. Further analysis demonstrates that the innovation in forecast revisions also affects the association between investor response and analyst characteristics. Our findings are consistent with increased information uncertainty stimulating investor demand for analyst research.
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Volume (Year): 28 (2009) Issue (Month): 4 (July) Pages: 328-348 Download reference. The following formats are available: HTML
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