Associations between Forecast Errors and Excess Returns near to Earnings Announcements
This paper reassesses the information content of annual earnings announcements using errors in analyst forecasts published within one week of those announcements as the proxy for unexpected earnings. In addition to the use of analyst forecasts near to the announcement date, features which distinguis...
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| Veröffentlicht in: | The Accounting review 1987-01, Vol.62 (1), p.158-175 |
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| container_title | The Accounting review |
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| creator | Hughes, John S. Ricks, William E. |
| description | This paper reassesses the information content of annual earnings announcements using errors in analyst forecasts published within one week of those announcements as the proxy for unexpected earnings. In addition to the use of analyst forecasts near to the announcement date, features which distinguish this study from earlier work include: a more precise dating of earnings announcements; a comparison of analyst forecast errors and changes in fourth-quarter earnings as proxies for unexpected earnings; tests of unusual variability in excess returns at the time of earnings announcements with the influence of forecast errors removed; a separation of early and late disclosers within an industry; and an examination of the properties of forecast range as an ex ante measure of earnings predictability. We conclude that: provided that analyst forecast errors measure unexpected earnings, annual earnings announcements have information content even when compared to market expectations very near to those announcements; analyst forecast errors do not dominate fourth-quarter changes as a proxy for unexpected earnings; other information released concurrently with earnings announcements appears to have significant pricing implications; there is greater information content in earnings announcements of early disclosers than of late disclosers; and forecast ranges may provide a reasonable measure of the error in analyst forecasts, and hence of earnings predictability. |
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We conclude that: provided that analyst forecast errors measure unexpected earnings, annual earnings announcements have information content even when compared to market expectations very near to those announcements; analyst forecast errors do not dominate fourth-quarter changes as a proxy for unexpected earnings; other information released concurrently with earnings announcements appears to have significant pricing implications; there is greater information content in earnings announcements of early disclosers than of late disclosers; and forecast ranges may provide a reasonable measure of the error in analyst forecasts, and hence of earnings predictability.</description><identifier>ISSN: 0001-4826</identifier><identifier>EISSN: 1558-7967</identifier><identifier>CODEN: ACRVAS</identifier><language>eng</language><publisher>Menasha, Wis: American Accounting Association</publisher><subject>Analytical estimating ; Analytical forecasting ; Earnings ; Earnings forecasting ; Earnings per share ; Employment forecasting ; Error rates ; Errors ; Forecasting models ; Forecasting standards ; Forecasts ; Information content ; Securities analysis ; Short term ; Statistical analysis ; Statistical forecasts ; Statistical median ; Studies</subject><ispartof>The Accounting review, 1987-01, Vol.62 (1), p.158-175</ispartof><rights>Copyright American Accounting Association</rights><rights>Copyright American Accounting Association Jan 1987</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/248052$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/248052$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>314,776,780,799,27846,57992,58225</link.rule.ids></links><search><creatorcontrib>Hughes, John S.</creatorcontrib><creatorcontrib>Ricks, William E.</creatorcontrib><title>Associations between Forecast Errors and Excess Returns near to Earnings Announcements</title><title>The Accounting review</title><description>This paper reassesses the information content of annual earnings announcements using errors in analyst forecasts published within one week of those announcements as the proxy for unexpected earnings. 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We conclude that: provided that analyst forecast errors measure unexpected earnings, annual earnings announcements have information content even when compared to market expectations very near to those announcements; analyst forecast errors do not dominate fourth-quarter changes as a proxy for unexpected earnings; other information released concurrently with earnings announcements appears to have significant pricing implications; there is greater information content in earnings announcements of early disclosers than of late disclosers; and forecast ranges may provide a reasonable measure of the error in analyst forecasts, and hence of earnings predictability.</description><subject>Analytical estimating</subject><subject>Analytical forecasting</subject><subject>Earnings</subject><subject>Earnings forecasting</subject><subject>Earnings per share</subject><subject>Employment forecasting</subject><subject>Error rates</subject><subject>Errors</subject><subject>Forecasting models</subject><subject>Forecasting standards</subject><subject>Forecasts</subject><subject>Information content</subject><subject>Securities analysis</subject><subject>Short term</subject><subject>Statistical analysis</subject><subject>Statistical forecasts</subject><subject>Statistical median</subject><subject>Studies</subject><issn>0001-4826</issn><issn>1558-7967</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1987</creationdate><recordtype>article</recordtype><sourceid>0R3</sourceid><sourceid>HYQOX</sourceid><sourceid>K30</sourceid><sourceid>~OC</sourceid><recordid>eNp1zsFKxDAQBuAgCq6rT-Al6LmQaZomOS5LV4UFQdRrielUWtxkzWRR397AevU0_PDN_HPCFqCUqbRt9SlbCCGgakzdnrMLornEprWwYK8rougnl6cYiL9h_kIMfBMTekeZdynFRNyFgXffHon4E-ZDKjSgSzxH3rkUpvBOfBVCPASPOwyZLtnZ6D4Ir_7mkr1suuf1fbV9vHtYr7bVDBZypVoJMAxuEBrQgxVylEa4cYTRDtCoAb0dW-Nr1BqURWMMaumcsGXNCS-X7OZ4d5_i5wEp93Ms75XKvgajjNRWF3T7HwIpQEJjjCzq-qhmyjH1-zTtXPrp68YIVctfNZNjig</recordid><startdate>19870101</startdate><enddate>19870101</enddate><creator>Hughes, John S.</creator><creator>Ricks, William E.</creator><general>American Accounting Association</general><scope>0R3</scope><scope>ABKTN</scope><scope>FYSDU</scope><scope>GHEHK</scope><scope>HYQOX</scope><scope>HZAIM</scope><scope>K30</scope><scope>PAAUG</scope><scope>PAWHS</scope><scope>PAWZZ</scope><scope>PAXOH</scope><scope>PBHAV</scope><scope>PBQSW</scope><scope>PBYQZ</scope><scope>PCIWU</scope><scope>PCMID</scope><scope>PCZJX</scope><scope>PDGRG</scope><scope>PDWWI</scope><scope>PETMR</scope><scope>PFVGT</scope><scope>PGXDX</scope><scope>PIHIL</scope><scope>PISVA</scope><scope>PJCTQ</scope><scope>PJTMS</scope><scope>PLCHJ</scope><scope>PMHAD</scope><scope>PNQDJ</scope><scope>POUND</scope><scope>PPLAD</scope><scope>PQAPC</scope><scope>PQCAN</scope><scope>PQCMW</scope><scope>PQEME</scope><scope>PQHKH</scope><scope>PQMID</scope><scope>PQNCT</scope><scope>PQNET</scope><scope>PQSCT</scope><scope>PQSET</scope><scope>PSVJG</scope><scope>PVMQY</scope><scope>PZGFC</scope><scope>SFNNT</scope><scope>~OB</scope><scope>~OC</scope><scope>~OG</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>19870101</creationdate><title>Associations between Forecast Errors and Excess Returns near to Earnings Announcements</title><author>Hughes, John S. ; Ricks, William E.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-j191t-56311ddad071ec1903f380aff1f9d145dec9f68c2e77159e888e73aa0911da0c3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>1987</creationdate><topic>Analytical estimating</topic><topic>Analytical forecasting</topic><topic>Earnings</topic><topic>Earnings forecasting</topic><topic>Earnings per share</topic><topic>Employment forecasting</topic><topic>Error rates</topic><topic>Errors</topic><topic>Forecasting models</topic><topic>Forecasting standards</topic><topic>Forecasts</topic><topic>Information content</topic><topic>Securities analysis</topic><topic>Short term</topic><topic>Statistical analysis</topic><topic>Statistical forecasts</topic><topic>Statistical median</topic><topic>Studies</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Hughes, John S.</creatorcontrib><creatorcontrib>Ricks, William E.</creatorcontrib><collection>Periodicals Archive Online Collection 1.2</collection><collection>Periodicals Archive Online JSTOR Titles</collection><collection>Periodicals Index Online Segment 07</collection><collection>Periodicals Index Online Segment 08</collection><collection>ProQuest Historical Periodicals</collection><collection>Periodicals Index Online Segment 26</collection><collection>Periodicals Index Online</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - 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In addition to the use of analyst forecasts near to the announcement date, features which distinguish this study from earlier work include: a more precise dating of earnings announcements; a comparison of analyst forecast errors and changes in fourth-quarter earnings as proxies for unexpected earnings; tests of unusual variability in excess returns at the time of earnings announcements with the influence of forecast errors removed; a separation of early and late disclosers within an industry; and an examination of the properties of forecast range as an ex ante measure of earnings predictability. We conclude that: provided that analyst forecast errors measure unexpected earnings, annual earnings announcements have information content even when compared to market expectations very near to those announcements; analyst forecast errors do not dominate fourth-quarter changes as a proxy for unexpected earnings; other information released concurrently with earnings announcements appears to have significant pricing implications; there is greater information content in earnings announcements of early disclosers than of late disclosers; and forecast ranges may provide a reasonable measure of the error in analyst forecasts, and hence of earnings predictability.</abstract><cop>Menasha, Wis</cop><pub>American Accounting Association</pub><tpages>18</tpages></addata></record> |
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| ispartof | The Accounting review, 1987-01, Vol.62 (1), p.158-175 |
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| language | eng |
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| source | Jstor Complete Legacy; Business Source Complete; Alma/SFX Local Collection; Periodicals Index Online |
| subjects | Analytical estimating Analytical forecasting Earnings Earnings forecasting Earnings per share Employment forecasting Error rates Errors Forecasting models Forecasting standards Forecasts Information content Securities analysis Short term Statistical analysis Statistical forecasts Statistical median Studies |
| title | Associations between Forecast Errors and Excess Returns near to Earnings Announcements |
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