The Impact of Electronic Commerce Assurance on Financial Analysts' Earnings Forecasts and Stock Price Estimates

2000 ◽  
Vol 19 (Supplement) ◽  
pp. 5-22 ◽  
Author(s):  
James E. Hunton ◽  
Tanya Benford ◽  
Vicky Arnold ◽  
Steve G. Sutton
Keyword(s):  
Electronic Commerce ◽  
Stock Price ◽  
Financial Analysts ◽  
Earnings Forecasts ◽  
The Impact

The Impact of Electronic Commerce Assurance on Financial Analysts' Earnings Forecasts and Stock Price Estimates (Retracted)

2000 ◽  
Vol 19 (s-1) ◽  
pp. 5-22 ◽  
Author(s):  
James E. Hunton ◽  
Tanya Benford ◽  
Vicky Arnold ◽  
Steve G. Sutton
Keyword(s):  
Electronic Commerce ◽  
Stock Price ◽  
Financial Analysts ◽  
Earnings Forecasts ◽  
Second Phase ◽  
Market Participants ◽  
Information Hypothesis ◽  
Risk Condition ◽  
The Impact ◽  
Significant Interaction Term

The objective of this study is to assess the impact of electronic commerce (EC) assurance on earnings forecasts and stock price estimates of financial analysts. The theoretical foundation of the current study is based on the information hypothesis (Fama and Laffer 1971; Wallace 1980), which supports the notion that EC assurance is a means of reducing information asymmetry and uncertainty for financial market participants. In the first phase of this study, a survey of 37 financial analysts indicates the importance of vendor- and outcome-based risk factors when forecasting the financial performance of firms engaged in EC. In the second phase, 87 analysts participate in a 2(high and low vendor-based risk)×2(high and low outcome-based risk) experiment. As hypothesized, EC assurance significantly increases earnings forecasts and stock price estimates in the high-risk, as compared to the low-risk, condition. In addition, a significant interaction term is obtained such that EC assurance yields a pronounced impact when both vendor- and outcome-based risks are high. The findings suggest that EC assurance reduces risk for market participants, thereby generating higher expectations of firm performance and value.

Discussion: “Dispersion in Analysts' Earnings Forecasts as a Measure of Uncertainty”

1998 ◽  
Vol 13 (3) ◽  
pp. 271-274 ◽  
Author(s):  
Lawrence D. Brown
Keyword(s):  
Stock Price ◽  
Annual Report ◽  
Earnings Forecasts ◽  
Analyst Forecast ◽  
Earnings Forecast ◽  
Data Set ◽  
Forecast Dispersion ◽  
Forecast Revision ◽  
Analyst Earnings ◽  
The Impact

This paper tackles an interesting question; namely, whether dispersion in analysts' earnings forecasts reflects uncertainty about firms' future economic performance. It improves on the extant literature in three ways. First, it uses detailed analyst earnings forecast data to estimate analyst forecast dispersion and revision. The contrasting evidence of Morse, Stephan, and Stice (1991) and Brown and Han (1992), who respectively used consensus and detailed analyst data to examine the impact of earnings announcements on forecast dispersion, suggest that detailed data are preferable for determining the data set on which analysts' forecasts are conditioned. Second, it relates forecast dispersion to both analyst earnings forecast revision and stock price reaction to the subsequent earnings announcement. Previous studies related forecast dispersion to either analyst forecast revision (e.g., Stickel 1989) or to subsequent stock price movements (e.g., Daley et al. [1988]), but not to both revision and returns. Third, it includes the interim quarters along with the annual report. In contrast, previous research focused on the annual report, ignoring the interims (Daley et al. [1988]).

scholarly journals Analyst coverage and future stock price crash risk

2019 ◽  
Vol 20 (1) ◽  
pp. 63-77 ◽  
Author(s):  
Guanming He ◽  
Lu Bai ◽  
Helen Mengbing Ren
Keyword(s):  
Stock Price ◽  
Risk Measure ◽  
Investment Decision ◽  
Financial Analysts ◽  
Crash Risk ◽  
Analyst Coverage ◽  
Content Type ◽  
Information Intermediaries ◽  
Investment Decision Making ◽  
The Impact

Purpose Whether financial analysts play an effective role as information intermediaries and monitors has triggered a wide spread of debate among academics and practitioners to date. The purpose of this paper is to complement this debate by investigating the association between analyst coverage and firm-specific future stock price crash risk. Design/methodology/approach Regression analysis is based on a large sample of US public firms and the crash risk measure of Hutton et al. (2009). Potential endogeneity concerns are alleviated by restricting the sample period to the post-Regulation-FD period and conducting an analysis of the impact threshold for a confounding variable method per Larcker and Rusticus (2010). Findings Evidence reveals that a high level of analyst coverage is associated with lower future stock price crash risk. Furthermore, the negative association between analyst coverage and stock price crash risk is stronger for firms that have high financial opacity. Additionally, analyst forecast pessimism is negatively associated with future crash risk. Research limitations/implications Our research provides evidence in support for the view that financial analysts play an active information intermediary role in a way that increases information transparency of a firm and reduces its crash risk. Also, our study offers support for the view that analysts perform an effective monitoring role in a way that constraints management’s bad news hoarding activities and reduces future crash risk. Practical implications This study is of interest to investors who seek analyst reports for their investment decision making and for information providers who demand external financing. The findings of this study also have some other important implications for practitioners, given the economic and welfare consequences of stock price crashes. Originality/value This study offers support for the view that analysts serve positive roles as information intermediaries and monitors in the US stock market.

scholarly journals The Role Of Earnings Quality In Financial Analyst Forecast Accuracy

2013 ◽  
Vol 30 (1) ◽  
pp. 255 ◽  
Author(s):  
David Salerno
Keyword(s):  
Earnings Quality ◽  
Financial Analysts ◽  
Forecast Accuracy ◽  
Earnings Forecasts ◽  
Cash Flows ◽  
Analyst Forecast ◽  
Financial Reports ◽  
The Individual ◽  
Reported Earnings ◽  
The Impact

This study investigates the impact that the quality of reported earnings has on the accuracy of financial analysts earnings forecasts. Extant research indicates that earnings attributes are important considerations to users of accounting information. One such attribute is earnings quality; often measured as the magnitude of accruals that do not convert to cash in a timely manner, where a poor match of cash flows and accruals indicates low earnings quality. Such accruals could reduce the usefulness of financial reports. This study uses two measurements of forecast accuracy to assess the impact that earnings quality has on the forecast accuracy of financial analysts. Following prior research, one measurement considers the environment in which the analyst operates and compares their accuracy to that of their peers. The second compares the individual analyst forecast to the actual reported earnings. For both measurements of accuracy the results show that higher earnings quality is associated with improved forecast accuracy.

scholarly journals The Impact of CEO Turnover On Security Analysts Forecast Accuracy

2011 ◽  
Vol 14 (4) ◽  
pp. 71 ◽  
Author(s):  
Mehdi Sheikholeslami ◽  
Michael D. Wilson ◽  
J. Roger Selin
Keyword(s):  
Financial Analysts ◽  
Control Sample ◽  
Forecast Accuracy ◽  
Earnings Forecasts ◽  
Ceo Turnover ◽  
Sample Design ◽  
Security Analysts ◽  
The Impact

<span>This paper reports the results of a study on the impact of CEO turnover on the accuracy of financial analysts earnings forecasts. Using Value Lines earnings forecasts and a control sample design, the study reveals marginally more accurate earnings forecasts for CEO change firms after CEO turnover. This result may be attributed to the publicity surrounding the CEO replacements.</span>

Do Stock Prices Influence Analysts' Earnings Forecasts?

2013 ◽  
Vol 26 (1) ◽  
pp. 85-108 ◽  
Author(s):  
Jeffrey S. Miller ◽  
Lisa M. Sedor
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Financial Analysts ◽  
Earnings Forecasts ◽  
Data Availability ◽  
Earnings Forecast ◽  
Future Earnings ◽  
Management Earnings Forecast ◽  
Stock Price Reaction ◽  
Made In

ABSTRACT This study uses an experiment with professional financial analysts to examine whether stock prices influence analysts' earnings forecasts. The findings indicate that analysts' revised forecasts made in response to a management earnings forecast differ depending on the level of uncertainty communicated by management's guidance and the stock price reaction to it. Lower (higher) stock price leads to lower (higher) analysts' forecasts when uncertainty about future earnings is high, but not when uncertainty about future earnings is low. Overall, the evidence suggests that the documented association between prior security returns and analysts' earnings forecasts is due, at least in part, to the influence of stock price on analysts' earnings forecasts. Data Availability: Contact the authors.

Impact of market-wide versus firm-specific information on financial analysts

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Omar Farooq
Keyword(s):  
Firm Value ◽  
Stock Price ◽  
Economies Of Scale ◽  
Financial Analysts ◽  
Specific Information ◽  
Analyst Coverage ◽  
Content Type ◽  
Different Types ◽  
Types Of Information ◽  
The Impact

PurposeThis paper documents the effect of different types of information on the value of financial analysts.Design/methodology/approachThe authors use the pooled OLS regression and the data of nonfinancial firms from France to test our hypotheses. The data covers the period between 1997 and 2019.FindingsThe results show that analysts are more likely to cover those firms that incorporated greater proportion of market-wide information in their prices. Consistent with the economies of scale view, the authors argue that analysts specialize in the interpretation market-wide information. By doing so, they are able to cover relatively large number of firms simultaneously. The results also show that the value of analyst coverage (measured as the impact of analyst coverage on firm value, probability of stock price crash and probability of stock price jump) is a function of the extent to which different types of information are incorporated in prices. The authors’ results suggest that the impact of analyst coverage on firm value and on probability of crash is less pronounced in firms that incorporate greater proportion of market-wide information. In case of probability of jump, the results show that the impact of analyst coverage is more pronounced firms that incorporate greater proportion of market-wide information.Originality/valueThe major contribution of this paper is to document the impact of different types of information on the extent of analyst coverage. Furthermore, this paper also uses various measures (the impact of analyst coverage on firm value, probability of stock price crash and probability of stock price jump) to show how different types of information affects the value of analyst coverage.

Comprehensive Income: which potential effects on firms' performance evaluation and users' decision process?

2016 ◽  
pp. 55-94
Author(s):  
Pier Luigi Marchini ◽  
Carlotta D'Este
Keyword(s):  
Performance Evaluation ◽  
Decision Process ◽  
Financial Analysts ◽  
Listed Companies ◽  
Financial Statement ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
Gains And Losses ◽  
The Impact

The reporting of comprehensive income is becoming increasingly important. After the introduction of Other Comprehensive Income (OCI) reporting, as required by the 2007 IAS 1-revised, the IASB is currently seeking inputs from investors on the usefulness of unrealized gains and losses and on the role of comprehensive income. This circumstance is of particular relevance in code law countries, as local pre-IFRS accounting models influence financial statement preparers and users. This study aims at investigating the role played by unrealized gains and losses reporting on users' decision process, by examining the impact of OCI on the Italian listed companies RoE ratio and by surveying a sample of financial analysts, also content analysing their formal reports. The results show that the reporting of comprehensive income does not affect the financial statement users' decision process, although it statistically affects Italian listed entities' performance.

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