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 Informational Feedback Effect of Stock Prices on Corporate Disclosure written by Luo Zuo (Ph. D.) and published by . This book was released on 2013 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies whether managers use investor information they learn from the stock market when making forward-looking disclosures. Using annual management earnings forecasts from 1996 to 2010, I find that the association between forecast revisions and stock price changes over the revision periods is stronger when there is more informed trading. Further, the effect of investor information on the revision-return relation remains after controlling for various sources of managerial and public information, and is more pronounced when the information is more relevant to predicted earnings. In addition, more investor information contained in stock prices leads to a greater improvement in forecast accuracy but a weaker market reaction to the subsequent forecast announcement. My study highlights the two-way information flows between firms and capital markets and has implications for the real effects of financial markets.

Download or read book Effects of Feedback on Probabilistic Forecasts of Stock Prices written by Yaz Gulnur Muradoglu and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reports the results of an experiment in stock-price forecasting that investigated the effects of feedback on various dimensions of probability forecasting accuracy. Three types of feedback were used: (1) simple outcome feedback, (2) outcome feedback presented in the task format, and (3) performance feedback in the form of an overall accuracy score in addition to detailed calibration information. While calibration improved for all the feedback groups, forecasters' skill was found to improve only for the task-formated outcome feedback and performance feedback groups (but not for the simple outcome feedback group). Finally, the forecasters in the performance feedback group also improved their mean slope and mean probability scores, an effect not observed in the other feedback groups. It is suggested that, in a dynamic environment like the stock market, probability forecasting offers distinct advantages by providing an important channel of communication between the forecasters and the users of financial information.

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 The Impact of Management Forecasts on Short Term Stock Price Volatility written by Joseph D. Piotroski and published by . This book was released on 2013 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of management forecasts on short-term stock return volatility. Two measures of volatility are employed: excess intra-day price volatility and the standard deviation of returns. I find that the average management forecast is followed by heightened volatility in the fifteen-day period following the traditional announcement window. The magnitude and persistence of the heightened volatility are positively related to the forecast's information content and inversely related to the forecast's precision and pre-announcement trading volume. Moreover, I find that the increase in volatility after a management forecast is significantly greater than volatility generated by comparable economic news on an earnings announcement date. Consistent with risk-averse investors pricing an unexpected increase in volatility-related risk, ex post changes in volatility are negatively related to announcement period returns. The pricing of the change in volatility is shown to be stronger for firms issuing bad earnings news.

Download or read book The Effect of Differential Amounts of Interim Information on Stock Prices Variability written by Amal Abdel Wakil Mahmoud and published by . This book was released on 1985 with total page 226 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Consequences of Management Earnings Forecast Regulation written by Bin Ke and published by . This book was released on 2019 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the consequences of a management earnings forecast regulation implemented in a staggered manner. The regulation substantially increases the directly affected firms' frequency of management forecasts. Nevertheless, approximately 14% of the directly affected firms fail to comply with the regulation (noncompliant firms). The regulation helps increase the stock price informativeness of the directly affected firms that issue a forecast. The regulation also helps increase the stock price informativeness of the noncompliant firms (a spillover), but we find no evidence of a similar spillover for the firms that are not required to issue mandatory forecasts in the post-regulation period.

Download or read book The Economics of Accounting written by Richard Moses Frankel and published by Oxford University Press. This book was released on 2024 with total page 193 pages. Available in PDF, EPUB and Kindle. Book excerpt: "In today's complex business landscape, understanding the economic roles of accounting is essential. The Economics of Accounting demystifies the subject in an eye-opening exploration of how accounting plays a vital role in driving business efficiency and creating value. Internally, accounting information acts as a linchpin, making contracts more effective and aiding managerial decisions when market prices are unavailable. By providing valuable insights, accounting helps bridge information gaps, enabling price discovery and reducing trading costs in capital market transactions. Throughout the book, our primary measure of efficiency is shareholder value. However, we also delve into discussions on regulatory, social, and contract efficiency. It's important to note that shareholder value maximization and stakeholder protection are not conflicting objectives. In fact, accounting information plays a pivotal role in fostering firms' commitment to stakeholder protection, leading to increased value creation for shareholders. Engaging and accessible, this book will enlighten readers on the transformative power of accounting in today's business landscape"--

Download or read book Feedback Effect of Stock Prices on Fundamental Values written by Naveen Khanna and published by . This book was released on 2000 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we attribute a resource allocation role to stock prices. When informed investors possess private information important to a firm's investment decision, they need to transmit it to the firm manager. A natural way to achieve this is by trading in a way that allows the manager to infer their information. However, when their trading patterns affect firm investments, there is an incentive to generate the pattern the manager responds to. For instance, if managers respond favorably to a string of price increases, later investors have an incentive to manipulate prices by buying shares (after observing earlier investors buying) even with unfavorable information. In most models of rational expectations, such price manipulation results in trading losses and can be supported only by imposing market incompleteness or restricted participation. However, with a feedback effect, just giving investors positive inventory leads to potential herding as investors can recoup their trading loss through the value increase of their inventory. Also, price manipulation is value increasing since informed investors generate investment-affecting patterns only when the resulting investment is desirable. However, since prices are martingales, herding in trades does not translate into serial correlation of returns and momentum based profits.

Download or read book The Effect of Analysts Forecasts on Stock Market Returns written by Stefano Bonini and published by . This book was released on 2009 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Stock returns forecasting is one of the major objectives of financial analysts. Equity Analysts' forecasts, on the other side, are one of the major sources of information used by less informed investors in their asset allocation decisions. Therefore, analysing which major drivers affect time series of stock returns could allow to shed light over the price revelation process in capital markets. In this paper we propose a model aimed at predicting stock market by combining both macroeconomic and microeconomic factors. We first develop a standard APT approach with multiple macroeconomic factors as regressors. We then integrate the model by explicitly including a metric for intrinsic equity value, basing upon a proxy derived by the weighted average of Stock Market Consensus Forecasts by equity analysts. Third, we complete the model by imposing an ARMA specification for the error term, which allows identifying stock returns' stationarity moving over time. The resulting model shows both a strong fitting capability when tested in the in-sample period and a good predictive capability when applied to an out-of-sample period of monthly Italian stock market returns. In particular, we employed specific estimation procedures based upon recently developed statistics aimed at testing for both factors' equal predicting power and forecast encompassing. As a major empirical finding, our model suggests that the information conveyed by analysts' forecasts is indeed a factor in determining future stock prices, even if there is the possibility that the information transferred could be biased.

Download or read book Causal Effects of Stock Market on Corporate Decisions Disclosure Mandates and Informational Feedback written by Jinglin Jiang and published by . This book was released on 2017 with total page 95 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Innovative Computing written by Jason C. Hung and published by Springer Nature. This book was released on 2022-01-04 with total page 1760 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book comprises select proceedings of the 4th International Conference on Innovative Computing (IC 2021) focusing on cutting-edge research carried out in the areas of information technology, science, and engineering. Some of the themes covered in this book are cloud communications and networking, high performance computing, architecture for secure and interactive IoT, satellite communication, wearable network and system, infrastructure management, etc. The essays are written by leading international experts, making it a valuable resource for researchers and practicing engineers alike.

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 The Role of Analysts Forecasts in the Momentum Effect written by Rand Kwong Yew Low and published by . This book was released on 2016 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We evaluate the extent to which sell-side equity analysts can facilitate market efficiency when there is increasing uncertainty about a stock's future value. The prevalence of the 52-week-high momentum anomaly, which can be largely attributed to information uncertainty, provides a setting for examining the value and timing of analysts' earnings forecast revisions. Our study finds that analysts can provide value-relevant signals to investors by picking up indicators of momentum. The ability to identify under or over-valued stocks suggests that analysts are important information intermediaries in the price-continuation momentum effect. However, we also observe pervasive asymmetric reaction to good and bad news throughout our study that is consistent with incentive-driven reporting and optimistic biases. Nevertheless, analysts' forecast revisions are informative at different stages to re-establish stock prices back to their fundamental valuation.

Download or read book Risk return Trade off and Forecasting Stock Market Return written by Xiaoxia Hao and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

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 Framing Effects in Stock Market Forecasts written by Markus Glaser and published by . This book was released on 2007 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Studies analyzing return expectations of financial market participants like fund managers, CFOs or individual investors are highly influential in academia and practice. Examples of such surveys in the U.S. are the Livingston Survey of the Federal Reserve Bank of Philadelphia, the Surveys of Consumers of the University of Michigan, the UBS/Gallup survey, and the Duke/CFO Business Outlook survey. An example from Germany is the ZEW Bankprognosen survey. We argue and show that the results in the surveys above are easily influenced by the elicitation mode of return expectations. Surveys that ask for future stock price levels (like the Livingston Survey) are more likely to produce mean reverting expectations than surveys that directly ask for future returns (like the Michigan Surveys of Consumers or the Duke/CFO Business Outlook survey). Furthermore, we conduct a questionnaire study that explicitly analyzes whether the specific elicitation mode affects return expectations in the above direction. In our study, subjects (students in business administration at two large German universities) were asked to state mean forecasts for seven time series. Using a between subject design, one half of the subjects was asked to state future price levels, the other group was directly asked for returns. We observe a highly significant framing effect. For upward sloping time series, the return forecasts stated by investors in the return forecast mode are significantly higher than those derived for investors in the price forecast mode. For downward sloping time series, the return forecasts given by investors in the return forecast mode are significantly lower than those derived for investors in the price forecast mode. We argue that this finding is consistent with behavioral theories of investor expectation formation that are based on the representativeness heuristic.