Download or read book Auditors Response to Analysts Forecast Properties written by Yin Yen William Foo and published by . This book was released on 2014 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study draws on information asymmetry theory and audit pricing theory to examine the linkage between analysts' earnings forecast properties and audit pricing in the US. To test these associations information asymmetry is measured by (1) analysts' forecast accuracy, and (2) analysts' forecast dispersion. This study provides evidence that higher analyst earnings forecast accuracy (dispersion) are associated with lower (higher) audit fee pricing. Our interpretation of these results are that analysts, as important financial intermediaries, provide useful information to other third parties, including auditors. We find that these relationships are stronger for small firms and younger firms in line with these firms having higher informational problems, and that audit firm industry specialization plays a significant role in reducing information asymmetry.
Download or read book Old English Cookery written by and published by . This book was released on 1894 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Audit Quality and Properties of Analyst Earnings Forecasts written by Bruce K. Behn and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Under the assumption that audit quality relates positively to unobservable financial reporting reliability, we investigate whether audit quality is associated with the predictability of accounting earnings by focusing on analyst earnings forecast properties. The evidence shows that analysts' earnings forecast accuracy is higher and the forecast dispersion is smaller for firms audited by a Big Five auditor. We further find that auditor industry specialization is associated with higher forecast accuracy and less forecast dispersion in the non-Big Five auditor sample but not in the Big Five auditor sample. Overall, our results suggest that high quality audit provided by Big Five auditors and industry specialist non-Big Five auditors is associated with better forecasting performance by analysts.
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 Earnings Management Pressure on Audit Clients written by Nathan J. Newton and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates whether auditors respond to earnings management pressure created by analyst forecasts. Analyst forecasts create an important earnings target for management, and professional standards direct auditors to consider how this pressure could affect their clients. Using annual analyst forecasts available during the planning phase of the audit, I examine whether this form of earnings management pressure affects clients' financial statement misstatements. Next, I investigate whether auditors respond to earnings forecast pressure through audit fees and reporting delay. I find that higher levels of analyst forecast pressure increase the likelihood of client restatement. I also find that auditors charge higher audit fees and delay the issuance of the audit report in response to pressure from analyst expectations. Finally, I find that when audit clients are subject to high analyst forecast pressure, a high audit fee response by auditors mitigates the likelihood of client misstatements. The electronic version of this dissertation is accessible from http://hdl.handle.net/1969.1/151105
Download or read book THE AUDITOR S ROLE IN FINANCIAL FORECASTS written by PAUL DANOS and published by . This book was released on 1979 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Have Analyst Forecast Properties Improved After Regulations written by Hassan Espahbodi and published by . This book was released on 2014 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Violation of securities laws and corporate scandals led to the passage of Regulation Fair Disclosure and the Sarbanes-Oxley Act, and to the Global Analyst Research Settlement, in early 2000. These regulations were designed to protect investors by reducing analyst conflicts of interest and improving the quality of financial information. As such, these regulations were expected to improve analysts' earnings forecast. This paper examines the trend in accuracy and dispersion of analysts' earnings forecasts over the period 1994-2009 to determine if forecast properties improved following these regulations. Consistent with the evidence provided by many of the earlier studies, we do find that forecast accuracy and dispersion improved during the period immediately after these regulations. This finding supports the notion (although it does not prove) that these regulations achieved their objectives in the short run. However, univariate and multivariate tests over the longer period show that analyst forecast accuracy declined and forecast dispersion significantly increased in subsequent years. The results are robust to alternative measures of our dependent variables, specifications of pre- and post-regulation periods, and sample composition; and imply that these regulations did not collectively improve the information environment despite the reduction in analyst conflicts of interest. The continued problem with the information environment, therefore, seems to be largely due to the quality of financial reports. Also, the difference between short- and long-term results suggest that regulators need to weigh the cost of regulations against both their short- and long-term benefits.
Download or read book Common Individual Auditors and Analyst Forecast Performance written by Junxiong Fang and published by . This book was released on 2020 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the importance of analysts covering firms with common audit partners to analyst earnings forecast performance (hereafter, we term the analyst, auditor, and the firm as being “common”). We find that analysts issue more accurate and less optimistically biased earnings forecasts for firms with common audit partners than other analysts following the same firm without common audit partners. Consistent with expectations, we identify auditors' style in making audit judgments as the channel through which analysts accumulate better information from covering firms with common audit partners. In a series of cross-sectional analyses, we find that this result is stronger when: (1) analysts suffer from poor direct access to firm-specific information from managers; (2) the information value from common auditors is higher, evident in their clients having more opaque operations, more difficult-to-forecast earnings, and greater stock price synchronicity; and (3) the quality of information that analysts elicit from auditors is higher, evident in auditors belonging to a large audit firm. Our results are robust to different approaches for addressing the potential endogeneity of analysts' coverage decisions.
Download or read book Audit Firm Industry Specialisation and Analyst Forecast Accuracy written by Yi Wu and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: My thesis examines whether the extent to which audit firms concentrate their business in particular industries ('audit firm industry specialisation') improves the usefulness of published financial reports for analysts' predictions of future earnings, and whether the strength of any observed association varies in a manner consistent with the existence of a causal relationship between audit quality and analyst forecast accuracy. Prior research presents diametrically opposite predictions and results regarding the directional relationship between audit firm industry specialisation and analyst forecast accuracy. My thesis shows that the conflicting results in the literature arise largely from prior studies' focus on short-horizon (end-of-year) forecast accuracy, which is subject to competing effects related to audit quality, and which in turn renders the resulting empirical models highly sensitive to model specification. I argue that analyst long-horizon (beginning-of-year) forecast accuracy is a more direct measure of the usefulness of published earnings for the prediction of future performance, and demonstrate that regressions using this metric consistently report a significant positive relation between audit firm industry specialisation and forecast accuracy. I then examine whether the observed positive association between audit firm industry specialisation and forecast accuracy varies with factors argued to reflect the relative importance of audit quality to the predictability of earnings. First, I show that the impact of audit firm industry specialisation on forecast accuracy increases with the underlying riskiness of clients' operations (proxied by cash flow volatility and innate accrual quality). I then argue that audit firm industry specialisation should have a greater impact on the forecast accuracy of lower-quality analysts (where quality is proxied by experience, employer size, 'All-Star' status and composite measures), who rely relatively heavily on published earnings when generating forecasts. To this end, I present evidence that audit firm industry specialisation has a greater impact on forecast accuracy for: (1) firm-years where the average 'quality' of analysts covering the firm is lower, and (2) for forecasts issued by individual analysts of lower quality. My results are robust to the use of controls for the endogenous selection of industry specialist auditors. In sum, my study presents evidence that greater audit quality does improve the usefulness of financial statements for the prediction of future earnings.
Download or read book Auditor Changes by the Firms Just Missing Analysts Forecasts written by Yaou Zhou and published by . This book was released on 2018 with total page 78 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study explores a unique setting to examine whether firms tend to change their auditors when their annually reported EPS "just misses" the most recent consensus analysts' forecasts (i.e., within one cent). I find that firms just missing the consensus analysts' forecasts are more likely to switch their auditors than their peer firms. Furthermore, these just-missing firms tend to switch to a more flexible auditor and have lower earnings quality than their peer firms after making the auditor switch, suggesting some opportunism in their switching behavior. In contrast with most opinion shopping literature, this "just-miss" setting allows me to test an implicit form of opportunistic auditor switching behavior -- the shopping of auditors' styles rather than their opinions. The results taken together indicate that firms can successfully shop for a more lenient auditor when the incumbent possibly constrains their ability to meet or beat the earnings target. This also provides empirical evidence in support of DeFond and Zhang (2014)'s argument that opinion shopping may occur in forms other than the reduction of going-concern opinions and still reflect an impairment of auditor independence/quality.
Download or read book The Magnitude and Timing of Analyst Forecast Response to Quarterly Earnings Announcements written by Lise Newman Graham and published by . This book was released on 1993 with total page 334 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Private Investors Behavioral Response to Financial Forecasts and Related Auditor s Reports written by Salvatore Thomas Anthony Cianciolo and published by . This book was released on 1975 with total page 392 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Analyst Forecast Properties Financial Distress and Business Risk written by Stephen John Ciccone and published by . This book was released on 2001 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the validity of using analyst forecast properties to proxy for information quality. The results suggest that dispersion and error measures are strongly related to financial distress and business risk. Firms with losses, earnings declines, and volatile earnings have a strong tendency towards high dispersion and error. Furthermore, forecast biases are predictable. Firms with low dispersion or error measures have relatively little forecast optimism, while firms with high dispersion or error measures have high amounts of forecast optimism. This finding is driven by loss firms, which tend to have greater dispersion and error. Caution should thus be employed when using dispersion and error measures to proxy for the quality of the information environment.
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 Auditor Conservatism and Analysts Fourth Quarter Earnings Forecasts written by Sudipta Basu and published by . This book was released on 2014 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: We argue that accounting conservatism makes earnings forecasting difficult by introducing transitory components in reported earnings. These transitory components are likely to be disproportionately represented in firms reporting losses. We show that analysts' mean forecast errors and absolute forecast errors for loss firms are substantially greater than those for profit firms in every single quarter, regardless of the forecast horizon. We argue that auditors' legal liability incentives make it likely that fourth quarter earnings are more conservative than interim quarter earnings. Forecast errors are always higher for loss firms in the fourth quarter compared to earlier quarters. Using special items to proxy for transitory components induced by conservatism, we document similar results for firms reporting special items, partitioned by the sign of the special items. Our results are consistent with auditor conservatism affecting fourth quarter earnings differentially, which causes analysts' earnings forecasts to be poorest for the fourth quarter.
Download or read book Research Handbook of Finance and Sustainability written by Sabri Boubaker and published by Edward Elgar Publishing. This book was released on 2018 with total page 681 pages. Available in PDF, EPUB and Kindle. Book excerpt: The severe consequences of the global financial crisis 2008-2009 and numerous accounting frauds and financial scandals over the last fifteen years have let to calls for more ethical and responsible actions in all economic activities including consumption, investing, governance and regulation. Despite the fact that ethics in business and corporate social responsibility rules have been adopted in various countries, more efforts have to be devoted to motivate and empower more actors to integrate ethical behavior and rules in making business and managerial decisions. The Research Handbook of Finance and Sustainability will provide the readers but particularly investors, managers, and policymakers with comprehensive coverage of the issues at the crossroads of finance, ethics and sustainable development as well as proposed solutions, while focusing on three different levels: corporations, investment funds, and financial markets.
Download or read book Disclosure of Corporate Forecasts to the Investor written by Financial Analysts Federation and published by . This book was released on 1973 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt:
