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...

Previous studies show that analysts’ compensation is not linked to earnings forecast accuracy. We evidence however that analysts have incentives to issue accurate forecasts. We show that brokerage houses reward their best forecasters by assigning them to large, mature firms. Covering such firms increases the potential for future compensation as these firms generate a great deal of investment ba...

The objective of this study is to examine whether analysts fully incorporate a nonproportionate algorithm of cost-change relative to revenue-change in forecasting earnings. We conjecture that the errors in analysts’ earnings forecasts made in the first month after the fiscal year-end are largely due to the errors in estimating expenses as a result of analysts’ use of a proportionate cost-change...

We examine the relation between brokerage firms research coverage and their equity ownership in IPO issuers due to earlier venture investments. Equity ownership aligns the interest of brokerage firms and IPO issuers by inducing affiliates to provide research coverage, especially by Institutional Investor all star analysts. Equity ownership also enhances the credibility of affiliated analysts wi...

Competency of a business analyst plays a crucial role in requirements elicitation, particularly now when the information systems are developed to support strategic business goals. However, as yet, there has been little research into the relationship between competencies of business analysts and requirements elicitation. In this study, a scenario-based approach has been used for the collection a...

This study analyzes the accuracy of forecasted target prices which are disclosed by leading investment banks within their analysts’ reports on German stocks for the period from 2002 to 2004. We compute a measure for target price forecast accuracy that evaluates the ability of analysts to exactly forecast the ex-ante (unknown) 12-months stock price. Overall, the target price forecasting accuracy...

Credit ratings affect firms’ access to capital and investment choices. We show that the identity of the credit analysts covering a firm significantly affects the firm’s rating, comparing ratings for the same firm at the same time across agencies. Analyst effects account for 30% of the within variation in ratings. Moreover, the rating biases of analysts carry through to credit spreads on the rat...

A model is developed which implies that if an analyst has high reputation or low ability, or if there is strong public information that is inconsistent with the analyst's private information, she is likely to herd. Herding is also common when informative private signals are positively correlated across analysts. The model is tested using data from analysts who publish investment newsletters. Co...

Analyst plays an important role in the development of enterprise. Meanwhile, during process this development, it is to gain financial support. Analysts' opinions can change public investors’ behavior and sentiments dramatically. However, relationship between three factors still waiting be discussed. This article focuses on analysts’ attention, corporate finance, innovation, using OLS Panel FE e...

This study analyzes the behavior and performance of 353 investment newsletters that make asset allocation recommendations during a period covering more than 21 years (June 1980 — November 2001). Newsletters change their asset mix between equity and cash using relatively simple rules that are strongly influenced by past market returns while macro-economic variables have only a very weak influenc...