We examine the relation between analysts’ earnings forecasts and firms’ intangible assets, including technology-based intangibles, brand names, and recognized intangibles. We predict that high information complexity of intangible assets increases the difficulty for analysts to assimilate information and increases analysts’ forecast error of intangibles-intensive firms. We find a positive associ...

This study analyzes trends in analyst forecast properties from 1987 through 1998 in the United States and seven Pacific Rim countries: Australia, New Zealand, Taiwan, Hong Kong, Japan, South Korea, and Thailand. Analyst forecast properties in the United States have become less dispersed, more accurate, and less optimistic during the sample period. Similar trends exist in Australia and New Zeala...

This study develops a theoretical model in which the voluntary disclosure of earnings forecast is a double-edged sword. Such disclosure may reduce the information asymmetry between investors and firms but simultaneously allows entrepreneurs create hype. Beginning from 2005 the disclosures of financial forecasts for Taiwanese public companies have not been mandatory, with firms being able to dec...

Analysts publish earnings forecasts with serially correlated errors. We assess rational versus cognitive limitation explanations for analysts’ underreaction to earnings news. Institutional investor voting for all-star analyst selections reveals whether these investors prefer analysts to issue forecasts with less serially correlated errors. Consistent with it being potentially rational for analy...

Security analysts generally provide forecasts of earnings for the current period as well as oneyear ahead earnings at fiscal year end. In this study, we derive an estimation procedure, which infers forecast bias from equivalent price expressions that utilize different horizon earnings forecasts. It is well documented that analyst long-horizon earnings forecasts tend to be more optimistic (ex po...

Theory suggests that managers issue earnings forecasts to reduce information asymmetry. An earnings forecast is more effective in reducing information asymmetry if it contains earnings news that is relatively more informative about the firm’s value. We hypothesize that a manager is more likely to issue an earnings forecast if investors perceive that earnings are more informative. We measure ear...

The primary objective of this study is to examine the association between the quality of mandatory earnings forecast, measured by forecast accuracy and bias, and the ownership structure of Taiwanese firms, measured by the divergence between the ultimate owner’s control and the equity ownership level. The study is based on 528 forecasts issued by Taiwanese listed firms from 1999 to 2001 which we...

Burgstahler and Eames (2003) present evidence that analysts commonly anticipate earnings management to avoid small losses, but often incorrectly predict its occurrence. Here we consider whether the market’s behavior mimics that of analysts. Our results suggest that analysts exhibit more forecast optimism in their zero earnings forecasts than in their other small earnings forecast levels, and ma...