The Timing of AnalystsEarnings Forecasts and InvestorsBeliefs. Preliminary Version

The Timing of Analysts’Earnings Forecasts and Investors Beliefs. The literature assumes that the timing and order of analysts’earnings forecasts is random. Ignoring strategic timing decisions of analysts may lead to inconsistent estimates of investors’beliefs. The paper analyzes the optimal timing strategies for analysts, and derives consistent estimates of investors’ beliefs, that are based on these forecasts. I follow the literature in assuming that analysts care foremost about the accuracy of their predictions, but in some cases may have an incentive to bias their forecasts. I further assume that investors reward early forecasting analysts. I show that in a benchmark case of a single analyst (hereafter the unconstrained optimum), higher precision of his private signal and lower reputation cost of a forecast error, will make him forecast earlier. I then introduce a timing game between two analysts and derive its unique subgame perfect equilibrium in pure strategies. The equilibrium has two patterns: if the unconstrained optimum of the analysts are su¢ ciently apart from each other, then each forecasts at his unconstrained optimum; otherwise, the times of the analysts’forecasts cluster. More precise private signals of an analyst, induces earlier forecasts, and increases the likelihood that the analysts’forecasts will be one immediately after the other. The paper presents an algorithm for calculating consistent investors’beliefs, and suggests guidelines for future empirical analysis.