Do analysts who understand accounting conservatism exhibit better forecasting performance?

This study investigates the performance of analysts when they match the asymmetric timeliness of their earnings forecast revisions (i.e., asymmetric forecast timeliness) with the asymmetric timeliness of firms' reported earnings (i.e., asymmetric earnings timeliness). We find that better timeliness-matching analysts produce more accurate earnings forecasts and elicit stronger market reactions to their forecast revisions. Further, better timeliness-matching analysts issue less biased earnings forecasts, more profitable stock recommendations and have more favorable career outcomes. Overall, our results indicate that analysts' ability to incorporate conditional conservatism into their earnings forecasts is an important reflection of analyst expertise and professional success.
Publisher
WILEY
Issue Date
2017-07
Language
English
Keywords

BIASED EARNINGS FORECASTS; SECURITY ANALYSTS; CONDITIONAL CONSERVATISM; CAREER CONCERNS; RECOMMENDATIONS; TIMELINESS; ACCURACY; ASSOCIATION; INFORMATION; INCENTIVES

Citation

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, v.44, no.7-8, pp.953 - 985

ISSN
0306-686X
DOI
10.1111/jbfa.12254
URI
http://hdl.handle.net/10203/225622
Appears in Collection
MT-Journal Papers(저널논문)
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