Document Type

Article

Date

1-1-2013

Embargo Period

4-28-2013

Keywords

analysts' forecast timing, analysts' pessimism, trading commissions

Language

English

Disciplines

Accounting

Description/Abstract

In this study, we show that on average relatively pessimistic analysts tend to reveal their earnings forecasts later than other analysts. Further, we find this forecast timing effect explains a substantial proportion of the well-known decrease in consensus analyst forecast optimism over the forecast period prior to earnings announcements, which helps explain why analysts’ longer term earnings forecasts are more optimistically biased than their shorter term forecasts. We extend McNichols and O’Brien’s (1997) and Hayes’ (1998) theory concerning analyst self-selection to argue that analysts with a relatively pessimistic view - compared to other analysts - are more reluctant to issue their earnings forecasts, with the result that they tend to defer revealing their earnings forecasts until later in the forecasting period than other analysts.

Additional Information

Copyright 2013 Journal of Business, Finance and Accounting. This article may be downloaded for personal use only. Any other use requires prior permission of the author and Journal of Business, Finance and Accounting. The article may be found at http://onlinelibrary.wiley.com/journal/10.1111/%28ISSN%291468-5957

Creative Commons License


This work is licensed under a Creative Commons Attribution 3.0 License.

Included in

Accounting Commons

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