Investors’ Reactions to Analysts’ Forecast Revisions and Information Uncertainty

Hou, Tony Chieh‐Tse; Hung, Weifeng; Gao, Simon S.

doi:10.1177/0148558x14530129

Cited by 14 publications

(7 citation statements)

References 66 publications

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“…This is evidenced in many existing literatures as well. For example, the study performed by Hou et al (2014) revealed that positive earnings forecast together with positive upgrade on earning forecast built investors' confidence towards a firm's stock performance, subsequently leading to a positive gain. This finding is also consistent with Fama (1984) and Ali et al (1992).…”

Section: Discussion Of Resultsmentioning

confidence: 99%

How useful are the equity analysts' report? Evidence from Malaysia

Thaker¹,

Mohamad²,

Kamil³

et al. 2018

Reports on Economics and Finance

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Using 657 Malaysian sell-side analyst recommendations from January 2010 until December 2015, this paper documents the usefulness of equity analyst reports to investors. The research findings revealed that target price and earnings forecast had a significant association with stock return. However, trading volume was shown to have an insignificant relationship with the return. Overall, our results indicate that the information content in the analyst report contained only 66.67% explanatory vis a vis stock return and only target price and earnings forecast were useful. This paper is expected to add value in enriching the literature available on analyst report especially in the context of Malaysian market.

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Section: Discussion Of Resultsmentioning

confidence: 99%

How useful are the equity analysts' report? Evidence from Malaysia

Thaker¹,

Mohamad²,

Kamil³

et al. 2018

Reports on Economics and Finance

View full text Add to dashboard Cite

show abstract

“…Return on assets (ROA) ratio also indicates the level of company's performance (Purnamasari 2015). Ball and Brown (1968), Hou et al (2014) indicate that in addition to the mentioned financial ratios, earning per share ratio (EPS) may serve as a variable when forecasting stock prices. Analysts estimate that the stock price increases when reported ratio is higher than expected and vice versa -if it is lower, then the stock price decreases (Renfro 2015).…”

Section: Review Of Theoretical Stock Price Forecast Methods and Modelsmentioning

confidence: 99%

Formation of an Integrated Stock Price Forecast Model in Lithuania

Dzikevičius

Šaranda

2016

Business, Management and Education

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Technical and fundamental analyses are widely used to forecast stock prices due to lack of knowledge of other modern models and methods such as Residual Income Model, ANN-APGARCH, Support Vector Machine, Probabilistic Neural Network and Genetic Fuzzy Systems. Although stock price forecast models integrating both technical and fundamental analyses are currently used widely, their integration is not justified comprehensively enough. This paper discusses theoretical one-factor and multi-factor stock price forecast models already applied by investors at a global level and determines possibility to create and apply practically a stock price forecast model which integrates fundamental and technical analysis with the reference to the Lithuanian stock market. The research is aimed to determine the relationship between stock prices of the 14 Lithuanian companies listed in the Main List by the Nasdaq OMX Baltic and various fundamental variables. Based on correlation and regression analysis results and application of c-Squared Test, ANOVA method, a general stock price forecast model is generated. This paper discusses practical implications how the developed model can be used to forecast stock prices by individual investors and suggests additional check measures.

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“…Dische and Zimmerman (1999) demonstrate that trading portfolios formed based on analyst forecast revisions could generate a cumulative abnormal return (CAR) of 14% in the Swiss market. In the Asia‐Pacific markets, Aitken, Frino, and Winn (1996) and Hou, Hung, and Gao (2014) document a positive association between analyst forecast revisions and stock returns using Australian stock market data in the period 1985–1992 and the period 1992–2009 respectively. Lim and Kong (2004) also obtain results of a positive association between analyst forecast revision and future abnormal returns in Australia as well as three other Asia‐Pacific markets: Hong Kong, Korea and Singapore.…”

Section: Related Literature and Hypothesis Developmentmentioning

confidence: 99%

Analyst underreaction and the post‐forecast revision drift

Chen

Narayanamoorthy

Sougiannis

et al. 2020

Business Fin & Account

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The post‐forecast revision drift (PFRD), the phenomenon of delayed stock price reactions to analyst forecast revisions, is a well‐documented market anomaly. Prior research attributes PFRD to underreaction by investors to analyst forecast revisions. This study investigates the role of the analyst forecast revision process itself in the PFRD anomaly. Using a large sample of US firms, we confirm prior findings of a positive serial correlation (momentum) in individual analysts’ revisions to their earnings forecasts and, based on both indirect and direct tests, document a positive association between this momentum and PFRD. Further analyses reveal that both the forecast revision momentum and PFRD vary in similar ways with respect to the nature of the news driving the revisions and the information environment. Collectively, our findings show that underreaction by individual analysts in the forecast revision process is an important contributor to the PFRD phenomenon.

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Investors’ Reactions to Analysts’ Forecast Revisions and Information Uncertainty

Cited by 14 publications

References 66 publications

How useful are the equity analysts' report? Evidence from Malaysia

How useful are the equity analysts' report? Evidence from Malaysia

Formation of an Integrated Stock Price Forecast Model in Lithuania

Analyst underreaction and the post‐forecast revision drift

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