Download or read book Why Do Analysts Revise Their Stock Recommendations After Earnings Announcements written by Ari Yezegel and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent research finds that many analyst recommendation revisions take place shortly after earnings announcements. Altinkilic and Hansen (2009) attribute the clustering of recommendations to analysts strategically piggybacking on earnings information to improve the perceived performance of their recommendations. This study proposes an alternative view: I find that analysts issue recommendations when they face greater demand from investors, when the relative supply of information available on earnings announcements is higher and when they detect mispricings. These results are consistent with analysts striving to meet the demands of investors by providing useful recommendations after earnings announcements.

Download or read book Financial Analysts Forecasts and Stock Recommendations written by Sundaresh Ramnath and published by Now Publishers Inc. This book was released on 2008 with total page 125 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial Analysts' Forecasts and Stock Recommendations reviews research related to the role of financial analysts in the allocation of resources in capital markets. The authors provide an organized look at the literature, with particular attention to important questions that remain open for further research. They focus research related to analysts' decision processes and the usefulness of their forecasts and stock recommendations. Some of the major surveys were published in the early 1990's and since then no less than 250 papers related to financial analysts have appeared in the nine major research journals that we used to launch our review of the literature. The research has evolved from descriptions of the statistical properties of analysts' forecasts to investigations of the incentives and decision processes that give rise to those properties. However, in spite of this broader focus, much of analysts' decision processes and the market's mechanism of drawing a useful consensus from the combination of individual analysts' decisions remain hidden in a black box. What do we know about the relevant valuation metrics and the mechanism by which analysts and investors translate forecasts into present equity values? What do we know about the heuristics relied upon by analysts and the market and the appropriateness of their use? Financial Analysts' Forecasts and Stock Recommendations examines these and other questions and concludes by highlighting area for future research.

Download or read book Financial Gatekeepers written by Yasuyuki Fuchita and published by Brookings Institution Press. This book was released on 2007-02-01 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt: A Brookings Institution Press and Nomura Institute of Capital Markets Research publication Developed country capital markets have devised a set of institutions and actors to help provide investors with timely and accurate information they need to make informed investment decisions. These actors have become known as "financial gatekeepers" and include auditors, financial analysts, and credit rating agencies. Corporate financial reporting scandals in the United States and elsewhere in recent years, however, have called into question the sufficiency of the legal framework governing these gatekeepers. Policymakers have since responded by imposing a series of new obligations, restrictions, and punishments—all with the purpose of strengthening investor confidence in these important actors. Financial Gatekeepers provides an in-depth look at these new frameworks, especially in the United States and Japan. How have they worked? Are further refinements appropriate? These are among the questions addressed in this timely and important volume. Contributors include Leslie Boni (University of New Mexico), Barry Bosworth (Brookings Institution), Tomoo Inoue (Seikei University), Zoe-Vonna Palmrose (University of Southern California), Frank Partnoy (University of San Diego School of Law), George Perry (Brookings Institution), Justin Pettit (UBS), Paul Stevens (Investment Company Institute), Peter Wallison (American Enterprise Institute).

Download or read book The Value of Analyst Forecast Revisions written by Kanyuan Huang and published by . This book was released on 2022 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the information contained in analyst forecast revisions following earnings announcements. I find that sorting firms on aggregated forecast revisions generates a much stronger post-earnings-announcement drift than sorting on measures of earnings surprises. The strong association between aggregated forecast revisions and post-earnings-announcement returns is driven by the subsample of firms with large-magnitude earnings surprises. This result is consistent with analysts' roles in interpreting corporate earnings. Further, the mispricing is the strongest when forecast revisions contradict earnings surprises, suggesting investors have difficulties in processing contradictory signals. Lastly, I document aggregated forecast revisions are more informative when the information environment around earnings announcements is more opaque, when firms have high accruals and when investors do not pay attention to the firm. They are less informative when analysts disagree with each other. Overall, these results point to the value of analyst forecast revisions following earnings announcements.

Download or read book Understanding Analysts Use and Under Use of Stock Returns and Other Analysts Forecasts when Forecasting Earnings written by Michael B. Clement and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, we examine how analysts are affected by the public actions of investors and other analysts by closely examining how analysts revise their earnings forecasts after an earnings announcement. In particular, we hypothesize that analysts observe the actions of investors and other analysts in order to more accurately forecast earnings and have the expertise to determine when these actions are most informative about future earnings. Consistent with our hypotheses, we find that analysts revise their earnings forecasts more strongly in response to returns and other analysts' revisions when these signals are more informative about future earnings changes. We also find that, consistent with analysts being conservative while facing uncertain information, underreactions are strongest (not weakest) when analysts are responding most strongly to these signals (i.e., when the signals are most informative). Lastly, we find that analysts who are most sensitive to the informativeness of others' actions are relatively more accurate in forecasting earnings, suggesting that the ability to extract information from the actions of others serves as a source of expertise for at least some analysts.

Download or read book The Impact of the Global Settlement written by United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs and published by . This book was released on 2004 with total page 136 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Management Earnings Forecasts and Value of Analyst Forecast Revisions written by Yongtae Kim and published by . This book was released on 2014 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the stock-price reactions to analyst forecast revisions around earnings announcements to test whether pre-announcement forecasts reflect analysts' private information or piggybacking on confounding events and news. We find that management earnings forecasts influence the timing and precision of analyst forecasts. More importantly, evidence suggests that prior studies' finding of weaker (stronger) stock-price responses to forecast revisions in the period immediately after (before) the prior-quarter earnings announcement disappears once management earnings forecasts are controlled for. To the extent that management earnings forecasts are public disclosures, our results suggest that the importance of analysts' information discovery role documented in prior studies is likely to be overstated.

Download or read book Summary Ahead of the Market written by BusinessNews Publishing, and published by Primento. This book was released on 2013-02-15 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: The must-read summary of Mitch Zacks' book: "Ahead of the Market: The Zacks Method for Spotting Stocks Early – In Any Economy". This complete summary of the ideas from Mitch Zacks' book "Ahead of the Market" shows that many investors rely on annual analyst reports, which are designed to advise which stocks to buy/ sell or hold. However, despite the fact that over $1 billion a year is put towards these reports, this summary sides with many other investors in thinking that a lot of the content is corrupt and biased in favor of the companies that fund them. This guide suggests that rather than following one report; you should combine the research compiled by a larger sample of analysts. This will teach you to identify certain patterns in what the analysts say and how their views change over time. You will then be better informed and be able to develop a better method for making smart investments. To this end, this summary offers four key analyst investment strategies to follow. Added-value of this summary: • Save time • Understand the key concepts • Increase your business knowledge To learn more, read "Ahead of the Market" and discover how to spot winning stocks, and steer clear of untrustworthy analyst reports.

Download or read book Discussion and Review of Bradshaw written by Malwina Woznik and published by . This book was released on 2013-08 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2011 in the subject Business economics - Controlling, grade: 1,3, University of Cologne (Seminar fur allgemeine BWL und Controlling), language: English, abstract: Since the beginning of the 90s research on issues referring to analysts' practise grew rapidly to such an extent that even several publications are concerned with giving an overview of this development. Besides the principal-agent problematic between the firm's managers and the equity investors, investors are dependent on analysts' information in times where equity trading soared and the trading turnover in 2008 was 35 times higher than in 1980. That is why shareholders are not able to analyse the amount of information regarding a company due to lack of time or ability. Therefore analysts advise investors to make a profitable decision by publishing a report including for instance stock recommendations or earnings forecasts. Another reason why there is so much research about analysts' practise is the fact that their information influences investors' trading behaviour. Thus, it is crucial to know how reliable those statements are and accordingly to be able to assess the quality of the outputs. However, to answer the question of analysts' process of transforming various information of stock recommendations have to be examined in detail. Recent investigations rather focus on the single properties of analysts' analyses as earnings forecasts and stock recommendations, but did not connect those two values. Prior studies deal with research questions like the effect of earnings forecasts on the stock prices or the use of stock recommendations to foretell abnormal return. Bradshaw (2004) is the first research paper which follows the question whether there is a link and if so how analysts incorporate the earnings forecasts into their stock recommendation. Because of the importance of Bradshaw (2004), this paper reviews the main issues and embeds them into the existing literature concerni

Download or read book The Timing and Value of Forecast and Recommendation Revisions written by Narasimhan Jegadeesh and published by . This book was released on 2003 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper evaluates the information content of analysts' one-quarter ahead earnings forecast revisions and recommendation revisions at various points in time relative to earnings announcement dates. We conduct three sets of tests to evaluate the information content of revisions. Across all tests, we find that the revisions are least informative in the week after earnings announcements and that the information content of revisions generally increases over event time. We find a sharp increase in the information content of upward forecast revisions and recommendations upgrades, but we do not find a similar increase for downward revisions and recommendation downgrades.

Download or read book Option Strategies for Earnings Announcements written by Ping Zhou and published by FT Press. This book was released on 2012-10-15 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt: By trading on corporate earnings, investors can reliably profit in both up and down markets, while avoiding market risk for nearly the entire quarter. In this book, two leading traders and portfolio managers present specific, actionable techniques anyone can use to capture these sizable profits. Ping Zhou and John Shon have performed an unprecedented empirical analysis of thousands of stocks, reviewing tens of millions of data points associated with option prices, earnings announcement returns, and fundamentals. Their massive analysis has identified consistent opportunities associated with focusing on the magnitude of the market’s reaction to earnings, not its direction. Option Trading Set-Ups for Corporate Earnings News offers concrete guidance for improving the likelihood of making correct forecasts, and managing the risks of incorrect forecasts. It introduces several ways to exploit option trading opportunities around earnings news, discuss crucial issues that most retail investors haven’t considered, and explore aspects of earnings-related option trading that have never been empirically examined and documented before. For example, they identify hidden patterns and potential opportunities based on valuation, industry, volatility, analyst forecasts, seasonality, and trades that immediately follow earnings announcements. Simply put, trading on earnings reports offers immense profit opportunities, if you know how. This book provides incontrovertible facts and detailed strategies, not just theories and anecdotes!

Download or read book Financial Analysts Heterogeneous Earnings Expectations and Their Stock Recommendations written by Steven Lustgarten and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study we test whether financial analysts' use their earnings forecasts to make stock recommendations. We hypothesize that if analysts use earnings forecasts as a basis for stock recommendations, the likelihood of a buy (sell) recommendation ought to increase (decrease) when the analyst's earnings forecast becomes more optimistic (pessimistic) relative to the market's expectation. The data supports this hypothesis. We also test the extent to which analysts' stock recommendations are based on public and/or on private earnings information. Private information is measured as the difference between the analysts own earnings forecast and the consensus forecasts of other analysts. Public information is measured as the difference between the consensus forecast and the random walk forecast. Our data show that stock recommendations are related to both private and public earnings information, private information is more important. We also find that the relationship between recommendations and forecasts is stronger where earnings are more value relevant. Factors such as higher earnings persistence and growth opportunities, lower market risk and larger firm size make stock recommendations more responsive to earnings forecasts. Stock recommendations are related to forecasted earnings surprises even when the forecast revision is held constant.

Download or read book Financial Analysts Earnings Forecast Dispersion and Intraday Stock Price Variability Around Quarterly Earnings Announcements written by Samuel S. Tung and published by . This book was released on 2020 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the relationship between the dispersion of analysts? earnings forecasts and stock price variability around quarterly earnings announcements. Consistent with theoretical predictions, the empirical analysis shows that stock price variability at the time of earnings announcements is positively related to the degree of analysts? earnings forecast dispersion. The analysis also demonstrates that stock price variability is significantly greater from two days before to two days after the earnings announcement for firms ranked in the bottom third on the basis of analysts? forecast dispersion, whereas it is significantly greater from eight days prior to five days following the earnings announcement for firms in the top third. These results suggest that there is information about the earnings announcement that becomes available to at least a subset of investors prior to the earnings release. The increased level of price variability for five days following the earnings announcement suggests that market participants take different amounts of time to process the information conveyed by the earnings announcement.

Download or read book Discussion and review of Bradshaw 2004 How do analysts use their earnings forecasts in generating stock recommendations written by Malwina Woznik and published by GRIN Verlag. This book was released on 2013-08-12 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2011 in the subject Business economics - Controlling, grade: 1,3, University of Cologne (Seminar für allgemeine BWL und Controlling), language: English, abstract: Since the beginning of the 90s research on issues referring to analysts’ practise grew rapidly to such an extent that even several publications are concerned with giving an overview of this development. Besides the principal-agent problematic between the firm’s managers and the equity investors, investors are dependent on analysts’ information in times where equity trading soared and the trading turnover in 2008 was 35 times higher than in 1980. That is why shareholders are not able to analyse the amount of information regarding a company due to lack of time or ability. Therefore analysts advise investors to make a profitable decision by publishing a report including for instance stock recommendations or earnings forecasts. Another reason why there is so much research about analysts’ practise is the fact that their information influences investors’ trading behaviour. Thus, it is crucial to know how reliable those statements are and accordingly to be able to assess the quality of the outputs. However, to answer the question of analysts’ process of transforming various information of stock recommendations have to be examined in detail. Recent investigations rather focus on the single properties of analysts’ analyses as earnings forecasts and stock recommendations, but did not connect those two values. Prior studies deal with research questions like the effect of earnings forecasts on the stock prices or the use of stock recommendations to foretell abnormal return. Bradshaw (2004) is the first research paper which follows the question whether there is a link and if so how analysts incorporate the earnings forecasts into their stock recommendation. Because of the importance of Bradshaw (2004), this paper reviews the main issues and embeds them into the existing literature concerning the role of analysts. The rest of this paper is organized as follows. The first chapter focuses on the character of analysts and potential key input factors which might be used by analysts for issuing recommendations. Then a brief review of Bradshaw (2004) is given to present the main results. This enables a discussion about potential and realized extensions in literature which follows in the third chapter. The final chapter concludes.

Download or read book The Handbook of Equity Market Anomalies written by Leonard Zacks and published by John Wiley & Sons. This book was released on 2011-08-24 with total page 352 pages. Available in PDF, EPUB and Kindle. Book excerpt: Investment pioneer Len Zacks presents the latest academic research on how to beat the market using equity anomalies The Handbook of Equity Market Anomalies organizes and summarizes research carried out by hundreds of finance and accounting professors over the last twenty years to identify and measure equity market inefficiencies and provides self-directed individual investors with a framework for incorporating the results of this research into their own investment processes. Edited by Len Zacks, CEO of Zacks Investment Research, and written by leading professors who have performed groundbreaking research on specific anomalies, this book succinctly summarizes the most important anomalies that savvy investors have used for decades to beat the market. Some of the anomalies addressed include the accrual anomaly, net stock anomalies, fundamental anomalies, estimate revisions, changes in and levels of broker recommendations, earnings-per-share surprises, insider trading, price momentum and technical analysis, value and size anomalies, and several seasonal anomalies. This reliable resource also provides insights on how to best use the various anomalies in both market neutral and in long investor portfolios. A treasure trove of investment research and wisdom, the book will save you literally thousands of hours by distilling the essence of twenty years of academic research into eleven clear chapters and providing the framework and conviction to develop market-beating strategies. Strips the academic jargon from the research and highlights the actual returns generated by the anomalies, and documented in the academic literature Provides a theoretical framework within which to understand the concepts of risk adjusted returns and market inefficiencies Anomalies are selected by Len Zacks, a pioneer in the field of investing As the founder of Zacks Investment Research, Len Zacks pioneered the concept of the earnings-per-share surprise in 1982 and developed the Zacks Rank, one of the first anomaly-based stock selection tools. Today, his firm manages U.S. equities for individual and institutional investors and provides investment software and investment data to all types of investors. Now, with his new book, he shows you what it takes to build a quant process to outperform an index based on academically documented market inefficiencies and anomalies.

Download or read book The Changing Impact of Analyst Recommendation Revisions Over Time written by Nadine Weber and published by LAP Lambert Academic Publishing. This book was released on 2011-03 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Efficient Markets Hypothesis beholds that all public information is incorporated in the stock price. Yet economists question to what extent this holds, and these discussions are, among other factors, fuelled by the existence of analyst recommendations. If all information is already incorporated in the stock price, what value can analysts add? A comprehensive study on the German market finds that, indeed, a tangible effect is measured after analysts voice their recommendations; this effect is especially powerful when an analyst changes his recommendation to his previous one. Moreover, this book is the first to research how analyst recommendations have changed over time, whether analysts have better forecasting power during bull or bear markets, and, most importantly, how can an investor profit from this knowledge? An advanced calendar-time strategy has been developed wherein an investor can earn significant abnormal returns by following a momentum strategy in the short-term while simultaneously abiding to a contrarian strategy in the long-term.

Download or read book The Change in Financial Analysts Forecast Attributes for Value and Growth Stocks written by Pieter Johannes De Jong and published by ProQuest. This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This research will concentrate on the changes in earnings forecasts, forecast accuracy and forecast dispersion for growth and value stocks after Reg FD. Each topic is presented in a separate essay. The first essay tests if growth and value stock returns respond more to forecasted earnings changes than they do to changes in earnings and whether these stock returns respond in a different fashion before and after Reg FD. This phenomenon is stronger for growth stock portfolio strategies than it is for value stock portfolios. After Reg FD, the overall impact of earnings expectations on stock returns is smaller, especially for growth stock returns. The second essay examines financial analysts' earnings forecast accuracy in value and growth stocks before and after the introduction of Reg FD. Accuracy for both stock groups (value and growth stocks) has improved after the introduction of Reg FD. The results in this essay provide additional evidence indicating that analysts did not just misinterpret available news but consciously tried to maintain relationships with managers. However, Reg FD efficiently limited these relationships between managers of growth firms and analysts so that the monetary advantage from manipulating earnings forecasts before the introduction of Reg FD no longer exists. The third essay evaluates the hypothesis stating that forecast dispersion, on both growth and value stock returns, has increased after the introduction Reg FD. However, the increased dispersion found at the second quarter of 2001 drastically dissipates at the second quarter of 2002, although value stock forecast dispersion before earnings announcement and value stock belief jumbling remain higher. The results in this essay suggest that corporate voluntary disclosure created a greater variety of opinions and, therefore, more uncertainty about value stocks. Also, value stock returns have a stronger inverse relationship with dispersion because financial analysts have become more uncertain about value firms' performance. The bigger the disagreement about a stock's value, the higher the market price relative to the true value of the stock, and the lower its future return.