Benchmark for Earnings Performance: Management Forecasts versus Analysts’ Forecasts
AbstractWe investigate the incremental information conveyed by management forecast errors over and above the consensus analyst forecast error at the time of earnings announcement. To the extent that analysts rationally revise their forecasts to subsume information contained in management releases, it is reasonable to argue that management forecasts are “dated” and that the revised analysts’ forecasts would constitute the more timely benchmark to evaluate performance. We find that when management forecasts and the subsequent analyst forecasts are different, management forecast errors convey information to the stock market that is not reflected in the consensus analyst forecast errors.
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Management forecasts; Analysts’ forecasts; Earnings Response Coefficient;
Find related papers by JEL classification:
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- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- G29 - Financial Economics - - Financial Institutions and Services - - - Other
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
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