Premium
The Impact of Analysts' Forecast Errors and Forecast Revisions on Stock Prices
Author(s) -
Beaver William,
Cornell Bradford,
Landsman Wayne R.,
Stubben Stephen R.
Publication year - 2008
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.2008.02079.x
Subject(s) - earnings , forecast error , stock (firearms) , quarter (canadian coin) , econometrics , economics , consensus forecast , forecast skill , statistics , finance , mathematics , geography , archaeology
We present a comprehensive analysis of the association between stock returns, quarterly earnings forecast errors, and quarter‐ahead and year‐ahead earnings forecast revisions. We find that forecast errors and the two forecast revisions have significant effects on stock prices, indicating each conveys information content. Findings also show that the fourth quarter differs from other quarters—the relative importance of the forecast error (quarter‐ahead forecast revision) is lower (higher). We also find a marked upward shift over time in the forecast error and forecast revision coefficients, consistent with the I/B/E/S database reflecting an improved quality of both earnings forecasts and actual earnings.