Download or read book Stock Market Overreaction to Management Earnings Forecasts written by Jean-Sebastien Michel and published by . This book was released on 2014 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: I hypothesize that the stock market overreacts to management earnings forecasts because of the uncertainty surrounding them. I find that negative management forecast surprises lead to a -5.9% abnormal return around the forecast and a 1.9% correction in the 2-month period after earnings are announced. Positive surprises work in the opposite direction, with a 1.9% abnormal return and a -1.7% correction. The level of the stock market overreaction varies with the forecast and firm characteristics, but the marginal impact remains the same: a 1% change in the stock market reaction around the forecast is associated with a 0.4% correction.
Download or read book Evidence Regarding the Stock Market s Overreaction to Management Earning Forecasts written by Chao-Shin Liu and published by . This book was released on 1992 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book An Empirical Evaluation of the Stock Price Reaction to Errors in Management Forecasts of Earnings Per Share written by Russell Theodore Gingras and published by . This book was released on 1974 with total page 384 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Analysts Overreaction underreaction to Earnings Information as an Explanation for Anomalous Stock Price Behavior written by Jeffery Abarbanell and published by . This book was released on 1991 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Stock Market Reaction to Management Earnings Forecasts written by Christos Naoum and published by . This book was released on 1979 with total page 332 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Individual Analysts Earnings Forecasts written by Dimitris Kenourgios and published by . This book was released on 2005 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents an analysis of two forms of overreaction (generalized overreaction and overreaction to prior earnings changes) in analysts' earnings forecasts for the UK stock market, using a sample of individual forecasts of earning per share from a British investment bank over the period 1989-2002. Given that previous UK empirical research over 1980s and mid '90s has provided limited and contradictory findings, we investigate whether and how overreaction of analysts forecasts varies across forecast horizons, firm size (small and large) and growth opportunities (high and low P/E ratio) in order to provide further and comparable evidence. Overall, our findings support the generalized overreaction hypothesis but reject the firm size effect, the overreaction for high P/E ratio companies and the higher overreaction regarding the forecasting horizon.
Download or read book Earnings Information and Stock Market Overreaction written by Ernest Kwame Agyepong and published by . This book was released on 1993 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The E P Effect and the Earnings Forecast Error Effect written by Jeehong Kim and published by . This book was released on 1987 with total page 386 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Management Earnings Forecasts During Price Pressure written by Igor Kadach and published by . This book was released on 2017 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Does a company's stock mispricing influence its decision to issue an earnings forecast? Does executive compensation affect the nature of the forecast? How does the market react to these forecasts? I address these questions using cross-sectional and time-series variation in stock mispricing related to the liquidity-driven trades of mutual funds. I find that managers issue earnings forecasts more frequently when their company's stock appears mispriced. In answering the second question, I uncover unintended consequences of executive compensation schemes, in that managers of mispriced firms strategically withhold information from investors to benefit from stock option exercises. I also show that in responding to forecasts of mispriced firms, investors act as if they are able to distinguish informative management earnings forecasts from uninformative ones. Finally, the difference-in-differences estimations lend credibility to the results by exploiting the exogenous fund outflows due to the 2003 mutual fund trading scandal. Collectively, my findings highlight the interplay between stock mispricing, managerial earnings forecast incentives, the company's resulting disclosure policy, and the market reaction to it.
Download or read book Investors Reactions to Management Earnings Forecasts written by Andrew M. Collins and published by . This book was released on 2014 with total page 194 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Earnings Guidance and Market Uncertainty written by Jonathan L. Rogers and published by . This book was released on 2011 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effect of disclosure on uncertainty by examining how management earnings forecasts affect stock market volatility. Using implied volatilities from exchange-traded options prices, we find that management earnings forecasts, on average, increase short-term volatility. This effect is attributable to forecasts that convey bad news, especially when firms release forecasts sporadically (as opposed to on a routine basis). In the longer run, market uncertainty declines after earnings are announced regardless of whether there is a preceding earnings forecast. This decline is mitigated when the firm issues a forecast that conveys negative news.
Download or read book Do Securities Markets Respond to Earnings Paths A Case for Low Balling written by John C. Alexander and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Earnings paths are proxied by analyst forecasts leading up to the earnings announcement. We find that after controlling for information content, as revealed by the earnings announcement, security returns measured over the entire quarter are affected by the path of expected earnings. We uncover cases of perverse market response in which security returns are significantly non-zero when the earnings announcement contains no information. We also observe cases in which positive information elicits negative or no market response, and negative information elicits a positive market response. These results suggest management may have an incentive to low-ball interim earnings expectations. Finally, we find that the bulk of the anomalous returns remain after attempts to relate them with alternate explanations such as shifts in risk, spillover effects, and the possibility of market overreaction.
Download or read book Stock Market Overreaction to Bad News in Good Times written by Pietro Veronesi and published by . This book was released on 1999 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Informational Feedback Effect of Stock Prices on Management Forecasts written by Luo Zuo and published by . This book was released on 2016 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using management earnings forecasts over the period 1996-2010, I find that the sensitivity of forecast revisions to contemporaneous stock returns is increasing in the amount of investors' private information in prices. This effect remains after controlling for various confounds and is robust to the use of mutual fund redemptions as a shock to price changes that is exogenous to fundamental news. Furthermore, investors' private information helps managers improve their forecast accuracy. Together, these findings suggest that stock prices contain information that managers do not otherwise have regarding firms' fundamentals, and that managers incorporate this information in their earnings forecasts.
Download or read book The Joint Effect of Management s Prior Forecast Accuracy and the Form of its Financial Forecasts on Investor Judgment written by D. Eric Hirst and published by . This book was released on 2000 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine how investor reaction to management earnings forecasts is a joint function of the form of the forecast and management's perceived credibility. In a laboratory experiment involving 126 individual investors, we compare investors' earnings predictions and their confidence therein after receiving point and closed range forecasts issued by managements whose previous forecasting accuracy is known to be either high or low. We used point and range forecasts, because they differ in the degree to which they communicate management's uncertainty about the future. We use management's prior forecasting accuracy as a measure of management's credibility, because prior research has documented the importance of this factor when considering the usefulness of management's voluntary forecasts.Our results show that, as expected, investors' earnings predictions are responsive to management's forecasts. However, as we hypothesized, forecast form did not influence investors' earnings estimates. In contrast, investors' confidence in their earnings predictions was influenced by the form of management's forecasts, but this effect emerged only when management was previously accurate in their forecasting. A similar interactive pattern was found in the dispersion of investors' predictions about the company's future earnings. Finally, consistent with the hypothesis that confidence is an important determinant of investor behavior, we find that investors' judgments of future stock price appreciation are a positive function of both unexpected earnings and the change in their confidence.Our study extends the literature on management forecasts by empirically testing the joint influence of management's credibility (i.e., forecasting accuracy) and forecast form. The prior literature has argued that both factors should be important, but has not delineated whether or how these two factors might interact. We present a theoretical framework that indicates when both factors should influence investor judgment.
Download or read book Credibility of Management Earnings Forecasts and Future Returns written by Norio Kitagawa and published by . This book was released on 2016 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the effect of managerial discretion over their initial earnings forecasts on future performance. First, by estimating the discretionary portion of initial management earnings forecasts (defined as discretionary forecasts) based on the findings of fundamental analysis research, we find that firms with higher discretionary forecasts are more likely to miss their earnings forecast at the end of the fiscal year and revise their forecasts downward to meet their earnings forecasts for the period, suggesting that forecast management through discretionary forecasting produces less credible management forecasts in terms of ex-post realization. Second, by using the hedge-portfolio test and regression analysis, we find that firms with higher discretionary forecasts earn consistently negative abnormal returns, suggesting that investors do not fully understand the implication of discretionary forecasts for the credibility of management earnings forecasts and thus overprice them at the forecast announcement.
Download or read book Behavioral Finance written by H. Kent Baker and published by John Wiley & Sons. This book was released on 2010-10-01 with total page 1184 pages. Available in PDF, EPUB and Kindle. Book excerpt: A definitive guide to the growing field of behavioral finance This reliable resource provides a comprehensive view of behavioral finance and its psychological foundations, as well as its applications to finance. Comprising contributed chapters written by distinguished authors from some of the most influential firms and universities in the world, Behavioral Finance provides a synthesis of the most essential elements of this discipline, including psychological concepts and behavioral biases, the behavioral aspects of asset pricing, asset allocation, and market prices, as well as investor behavior, corporate managerial behavior, and social influences. Uses a structured approach to put behavioral finance in perspective Relies on recent research findings to provide guidance through the maze of theories and concepts Discusses the impact of sub-optimal financial decisions on the efficiency of capital markets, personal wealth, and the performance of corporations Behavioral finance has quickly become part of mainstream finance. If you need to gain a better understanding of this topic, look no further than this book.
