This paper shows that analysts exhibit differential and persistent ability to issue accurate target prices (TPs), and that institutional and regulatory differences across countries affect TP accuracy. Using a sample of 16 countries, we find that better past TP forecasters, analysts with higher forecasting experience, following more firms, country-specialized, and employed by a large broker issue more accurate TPs. Further, the country's institutional and regulatory factors, such as the accounting disclosure quality, the origin of the legal system, cultural traits, and IFRS regulation explain cross-country differences in TP forecast accuracy.

Citation: Bilinski, P. (2014). Do analysts disclose cash flow forecasts with earnings estimates when earnings quality is low?. Journal of Business Finance and Accounting, 41(3/4), pp. 401-434. doi: 10.1111/jbfa.12056 This is the accepted version of the paper.This version of the publication may differ from the final published version. prediction, we find that analysts do not disclose cash flow forecasts when the quality of earnings is low. This is because cash flow forecast accuracy depends on the accuracy of the accrual estimates and the precision of accrual forecasts decreases for firms with low quality earnings. PermanentConsequently, as earnings quality decreases, cash flow forecasts become increasingly inaccurate compared to earnings estimates. Cash flow estimates that lack reliability are not useful to investors and, consequently, unlikely to be reported by analysts. This result provides an explanation for why analysts are less likely to report cash flow estimates when earnings quality is low.Keywords: earnings quality, analyst earnings and cash flow forecasts, cash flow forecast accuracy, price reaction to earnings and cash flow forecast announcements 

This paper shows that analysts exhibit differential and persistent ability to issue accurate target prices (TPs), and that institutional and regulatory differences across countries affect TP accuracy. Using a sample of 16 countries, we find that better past TP forecasters, analysts with higher forecasting experience, following more firms, country-specialized, and employed by a large broker issue more accurate TPs. Further, the country's institutional and regulatory factors, such as the accounting disclosure quality, the origin of the legal system, cultural traits, and IFRS regulation explain cross-country differences in TP forecast accuracy.

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Abstract:We document that prospectus disclosure of (i) the motives for a seasoned equity offering and (ii) the choice of the underwriter explain the long-run performance of equity issuers in the UK. Firms citing investment needs show no abnormal performance after the offering and have higher investment rates post-issue compared to the period before the offering. Issuers that state general corporate purposes and recapitalisation motives underperform, have similar investment rates pre-and post-issue, and their leverage tends to increase after the offering.Further, consistent with the certifying role of underwriters, equity issues underwritten by highquality brokers show no evidence of post-issue abnormal returns, but offerings taken public by low-quality underwriters exhibit negative abnormal performance. Together, our results document a significant role prospectus information on the intended use of offering proceeds and on the underwriter play in predicting issuers post-offering performance in the UK.