The Accuracy of Financial Analysts' Forecasts after Mergers

1994 ◽  
Vol 9 (3) ◽  
pp. 465-483 ◽  
Author(s):  
In-Mu Haw ◽  
Kooyul Jung ◽  
William Ruland
Keyword(s):  
Financial Analysts ◽  
Forecast Accuracy ◽  
Capital Intensity ◽  
Financial Leverage ◽  
Prediction Bias ◽  
Before And After ◽  
Intensity Changes ◽  
Industry Diversification

This paper examines forecasts developed by financial analysts before and after mergers. The study finds that forecast accuracy decreases sharply after mergers. These accuracy reductions tend to be more pronounced when financial leverage changes, when the merger does not provide earnings or industry diversification, when the purchase method of accounting is used to record the transaction, when capital intensity changes, and when the size of the target corporation is large compared to the size of the acquiring corporation. The data also show that reductions in forecast accuracy after mergers tend to be temporary. Accuracy returns to approximately the premerger level within four years after the merger. The study also finds that overprediction bias increases sharply in the year immediately following the merger. This increase in over-prediction bias, however, is also temporary. Overprediction bias returns to approximately the premerger level within the four-year postmerger study period.

Photoluminescence Detection of Shallow Impurity Neutralization in Iii-V Compound Semiconductors

1987 ◽  
Vol 104 ◽  
Author(s):  
Jörg Weber ◽  
Mandeep Singh
Keyword(s):  
Plasma Treatment ◽  
Atomic Hydrogen ◽  
Hydrogen Plasma ◽  
Compound Semiconductors ◽  
Exciton Luminescence ◽  
Before And After ◽  
Intensity Changes ◽  
Shallow Impurity ◽  
Intense Luminescence ◽  
Sulfur Donor

ABSTRACTWe studied the low-temperature photoluminescence (PL) of several III–V compound semiconductors before and after hydrogen-plasma treatment. Drastic intensity changes of the bound exciton luminescence after hydrogen plasma treatments indicate a neutralization of impurities by the atomic hydrogen. In GaP, neutralization of the sulfur donor as well as the acceptors (C, Zn, Cd) is observed. The intense luminescence of the exciton bound to isoelectronic N in GaP is fully quenched by hydrogen plasma treatment.

scholarly journals Earnings Forecast Optimism For U.S. Vs. Non-U.S. Firms

2013 ◽  
Vol 12 (11) ◽  
pp. 1491
Author(s):  
David Salerno ◽  
Nathan Jeppson
Keyword(s):  
Task Complexity ◽  
Financial Analysts ◽  
Forecast Accuracy ◽  
Earnings Forecasts ◽  
International Investment ◽  
Growth Potential ◽  
Earnings Forecast ◽  
Level Measurement ◽  
Investment Opportunities

This study examines whether financial analysts are more optimistic in their earnings forecasts for non-U.S. firms than they are for U.S. firms. Several areas of research motivate this examination. First, research shows that global economic influences, such as economic downturns and the desire to increase the international content of portfolios, encourage investors to seek out international investment opportunities in new markets. Second, literature also reveals that emerging markets provide superior growth potential; however, analyzing such firms could introduce task complexity which research finds to be associated with lower forecast accuracy. Finally, research shows that financial analysts cover firms of which they have a favorable opinion. Therefore, because of this literature, it is reasonable to expect that analysts make more optimistic forecasts (over-estimate errors) of the earnings potential of the non-U.S. firms that they choose to follow vs. U.S. firms. Using a summary level measurement of forecast optimism, the authors find that analysts forecasts are more optimistic for non-U.S. firms over both short and long-term horizons. In analyst-level tests, it was found that individual analysts produce more optimistic forecasts for non-U.S. firms in relation to their peers in the long-term; however, that optimism is reduced under short horizons. As portfolios become more internationally diversified, the result of this study will be useful to investors seeking analyst guidance about international investment opportunities.

The informativeness of impression management − financial analysts and rhetorical style of CEO letters

2019 ◽  
Vol 31 (3) ◽  
pp. 462-496 ◽  
Author(s):  
Beibei Yan ◽  
Walter Aerts ◽  
James Thewissen
Keyword(s):  
Impression Management ◽  
Financial Analysts ◽  
Forecast Accuracy ◽  
Earnings Forecasts ◽  
Earnings Forecast ◽  
Management Communication ◽  
Self Presentation ◽  
Content Type ◽  
Rhetorical Features ◽  
Occurrence Patterns

Purpose This paper aims to investigate the informativeness of rhetorical impression management patterns of CEO letters and examines whether these rhetorical features affect financial analysts’ forecasting behaviour. Design/methodology/approach The authors use textual analysis on a sample of 526 CEO letters of US firms and apply factor analysis on individual linguistic style measures to identify co-occurrence patterns of style features. Findings The authors identify three holistic style patterns (assertive acclaiming, cautious plausibility-based framing and logic-based rationalizing) and find that assertive rhetorical feature in CEO letters is negatively related with the dispersion of financial analysts’ earnings forecasts and positively associated with earnings forecast accuracy. CEOs’ use of a rationalizing rhetorical pattern tends to decrease the dispersion of financial analysts’ earnings, whereas a cautious plausibility-based rhetorical position is only marginally instrumental in getting more accurate earnings predictions. Practical implications Whilst impression management communication is often theorized as manipulative and void of real information content, the findings suggest that impression management serves both self-presentation and information-sharing purposes. Originality/value This paper elaborates on the co-occurrence of style characteristics in management communication and is a first attempt to validate the external ramifications of holistic style profiles of corporate narratives by focusing on an economic target audience.

Underlying factors of ups and downs in financial leverage overtime

2016 ◽  
Vol 23 (6) ◽  
pp. 1321-1342 ◽  
Author(s):  
Murat Kizildag ◽  
Ozgur Ozdemir
Keyword(s):  
Lower Cost ◽  
Macro Level ◽  
Financial Leverage ◽  
Short Term ◽  
Accounting Data ◽  
Before And After ◽  
Macroeconomic Indicators ◽  
Hospitality And Tourism ◽  
Time Frames

We present new stylized facts on the underlying reasons of US hospitality and tourism firms’ fluctuating levels of financial leverage during the period 1990–2015 using comprehensive micro- and macro-level accounting data overtime. To characterize this puzzling phenomenon, we quantified firm-specific and macroeconomic parameters and a diverse set of leverage proxies at various time frames with various structures. We further took account of the recent economic upheaval in our analyses so that we can compare firms’ leverage behavior as “before” and “after” the major economic turmoil in 2007–2009 periods. The primary themes of our arguments were that firm-specific leverage factors significantly influenced short-term leverage, while long-term leverage was mostly determined by macroeconomic indicators. Beyond that, book leverage was more favorable across firms than market leverage. Last, hospitality and tourism firms substantially extended their borrowing capacities, aggressively grew their leverage ratios, and dramatically increased collateral values leading to lower cost of borrowing due to relaxed lending standards in the aftermath of the recent upheaval. Our article complements previous work by examining whether leverage factors demonstrate discrepancies from the prior findings and by proposing rigorous industry-specific outlook and solution for the financial leverage literature.

Tone variation in financial news: A comparison of companies, journalists and financial analysts

2021 ◽  
pp. 026732312199952
Author(s):  
Irene Pollach ◽  
Lea Vindvad Hansen
Keyword(s):  
Financial Crisis ◽  
Financial Analysts ◽  
Empirical Support ◽  
Computer Assisted ◽  
Press Releases ◽  
Positivity Bias ◽  
Financial News ◽  
News Agencies ◽  
Before And After ◽  
Earnings Press Releases

This article reports the findings of a comparative study of the financial news produced by companies, financial analysts, financial newspapers and news agencies about the same news events, including data before and after the financial crisis. We ground this study in second-level agenda-setting, according to which news producers select substantive and evaluative attributes for the issues they cover. Using computer-assisted text analysis, we conduct pairwise comparisons of the evaluative tone of corporate quarterly earnings press releases and the corresponding analyst reports and news stories. Our overall hypothesis is that these actors produce news about the same events with an evaluative tone that furthers their own goals as well as the goals of those actors they are dependent on, which we find partial support for. We find a positivity bias in corporate earnings press releases and analyst reports, while financial journalists eliminate the corporate positivity bias, but do not add more negativity. The results also indicate differences in the tone of financial news before and after the financial crisis. Although all actors produce news in the period after the financial crisis that is less positive and less negative than before the crisis, the balance of positive and negative tone as well as relative differences among the actors suggest that news writing by financial journalists at financial newspapers and news agencies is more negative in tone after the financial crisis, thus providing also empirical support of their independence.

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