It's all about timing: Analyst forecasts during weekday non-trading hours

This study examines whether financial analysts purposefully issue more pessimistic earnings forecasts during weekday non-trading hours. We show that downward forecast revisions released during weekday non-trading hours draw less market attention, resulting in weaker negative stock price reactions than those released on weekends or trading hours. Such differential market responses to bad news provide analysts with an opportunity to minimize the adverse market impacts of their negative forecasts. In line with this notion, we find that analysts are more likely to issue downward forecast revisions during weekday non-trading hours than during weekends or trading hours. The documented timing phenomenon is more prominent for analysts who are less certain about their negative earnings forecasts either because the forecasted firms operate in a more opaque information environment or because the analysts have less forecasting experience and knowledge specific to these firms. The phenomenon is less pronounced for analysts affiliated with large brokerage firms and low-leverage firms. Collectively, our findings offer new insights into analysts' strategic forecasting behaviors.