The accuracy of financial analysts’ earnings forecasts and the Tunisian market reliance with time

Bouteska, Ahmed; Regaieg, Boutheina

doi:10.1080/23322039.2017.1345186

Cited by 6 publications

(5 citation statements)

References 45 publications

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“…Given that analysts’ primary objective is to maximize the accuracy of their forecasts, the phenomenon that firms tend to MBE may be used by analysts to boost their forecast accuracy if analysts merely report their forecast after the consensus date and ensure that the forecast is slightly higher the consensus, knowing that management is likely to demonstrate MBE behavior. This is consistent with the notion that analysts are motivated to try to issue more accurate forecasts, as accuracy is incentivized by better rewards and professional recognition (Ahmad and Boutheina, 2017; Rahman et al , 2019; Ramnath et al , 2008; Stickel, 1992) and career benefits (Hong and Kubik, 2003; Wang et al , 2017).…”

Section: Hypotheses Developmentsupporting

confidence: 68%

Analysts’ forecasts between last consensus and earning announcement date

Zhang

Gay

2020

JFRA

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Purpose Thomson financial database reports a monthly consensus measure of analysts’ forecasts in the third week of every month, and firms’ earnings announcement dates are usually different from the last consensus calculation date. Thus, there is a gap between the last consensus calculation date and the earnings announcement date of firms. This study aims to address the question: “Do analysts issue forecasts that are slightly higher than the consensus number to increase the accuracy of their forecasts?” Design/methodology/approach This study is based on a sample of 91,172 quarterly earnings forecasts of various firms from 1990 to 2007 made between the last consensus calculation date and quarterly earnings announcement date. Descriptive statistics and statistical tests were used to analyze the data. Findings The findings propose that contrary to expectation, analysts’ forecasts between the last consensus calculation date and earnings announcement date are smaller than the consensus number. Also, the forecasts made between the last consensus and earnings announcement date is not as informative as forecasts made at other times as they could merely reflect the analysts’ herding behavior resulting from their career concerns. Originality/value This study provides a link between the literature that studies firms’ meet or beat analysts’ earnings phenomenon and analysts’ forecast decision-making context. This study also provides useful implications for the literature on the information content of analysts’ forecasts.

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Section: Hypotheses Developmentsupporting

confidence: 68%

Analysts’ forecasts between last consensus and earning announcement date

Zhang

Gay

2020

JFRA

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“…Stock prices react to analysts’ estimates and recommendations with an underlying assumption that actual results will be approximately close to analysts’ estimates. Empirical evidence has demonstrated that, on average, portfolio creation based on analysts’ recommendations would help investors outperform the market (Ahmed and Boutheina, 2017; Womack, 1996). As investors tend to follow analysts’ recommendations, stock prices are likely to incorporate expectations related to future earnings.…”

Section: Review Of Literature and Hypotheses Developmentmentioning

confidence: 99%

Does earnings surprise determine the timing of the earnings announcement? Evidence from earnings announcements of Indian companies

Prasad

Prabhu²

2020

AJAR

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PurposeThe purpose of this study is to investigate whether the earnings surprise influences decision to make earnings announcements during or after the trading hours is influenced by the earnings surprise resulting from the difference between consensus earnings estimates and the actual reported earnings.Design/methodology/approachEvent study methodology was employed to test the hypotheses relating to earnings surprise and timing of earnings announcements. Twelve quarterly earnings announcements of 30 companies, drawn from BSE SENSEX of India, were studied to test the hypothesized relationships.FindingsThe study has found statistically significant differences in the market responses to the earnings announcements made during and after the trading hours. The market demonstrated a negative response to the earnings announcements made after the trading hours. Further, the results of the logistic regression have shown that the presence of significant earnings surprises is likely to induce firms to make earnings announcements after the trading hours. The results indicate that those firms that intend to reduce the overreaction and underreaction to earnings surprises are likely to make earnings announcements after the trading hours.Originality/valueThis paper highlights the market response to the earnings announcement made during and after the regular trading hour. Further, the paper examines if the earnings surprise influences the decision to announce the results.

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“…Premised on the above, the Piotroski F-Score as a LID variable may be more appropriate compared to the use of forecasts' earnings based on analyst consensus used by Lyle et al (2013), Spilioti (2015) and Ahmed and Boutheina (2017). Furthermore, the Piotroski F-Score which is based on historical financial information supports Damodaran (2012)'s views that the true value of the firm can be attributed to its financial fundamentals.…”

Section: Business Management and Strategymentioning

confidence: 99%

“…The proposed conceptual framework based on the hypotheses developed is illustrated in Figure 1. The use of analysts' forecast was supported by Ahmed and Boutheina (2017) whereby it was found that the accuracy of the analysts forecasting increase over time when the analysts understand the business of the firms that they are analysing and/or understand the demands of users/ readers of analysts' reports better, and the participants in the stock exchange have been increasing their reliance on the earnings forecast of analysts. However, the risk of forecast bias is present when using analysts' forecast as claimed by Scherbina (2004).…”

Section: Business Management and Strategymentioning

confidence: 99%

A Conceptual Framework for A Corporate Finance Valuation Method

Soon

Basiruddin

2018

BMS

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The Ohlson Model and its variants have been widely studied by researchers for value relevance of accounting information. It has been used to predict share prices and to assess the fundamental value of a firm. The original Ohlson Model does not clearly define the non-accounting information variables as the linear information dynamics variables. In relation to that, we propose a conceptual framework that includes the Piotroski F-Score, trading liquidity and systematic risk as the linear information dynamics variables in the Ohlson Model to improve prediction of share prices and forecasting capacity of the Ohlson Model or to better evaluate the fundamental value of the firm. Literature pertaining to Ohlson Model, Piotroski F-Score, trading liquidity and systematic risk are analysed, compared and synthesized to fulfil the research objective. It is expected that this paper will motivate future researchers to conduct more research in this field.

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The accuracy of financial analysts’ earnings forecasts and the Tunisian market reliance with time

Cited by 6 publications

References 45 publications

Analysts’ forecasts between last consensus and earning announcement date

Analysts’ forecasts between last consensus and earning announcement date

Does earnings surprise determine the timing of the earnings announcement? Evidence from earnings announcements of Indian companies

A Conceptual Framework for A Corporate Finance Valuation Method

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