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Changes in the Information Conveyed by Analysts ’ Forecasts After Earnings Announcements

This paper was not found in any repository; the policy of its publisher is unknown or unclear.
This paper was not found in any repository; the policy of its publisher is unknown or unclear.

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Abstract

After Earnings Announcements In this study we examine changes in the information conveyed by individual analysts ’ earnings forecasts over time, with the focus being on the changes around earnings announcements. We use the forecast-based measures Barron, Kim, Lim, and Stevens (1998) suggest for measuring the precisions of analysts ’ common and private information, which are based on the average precision of individual forecasts and the across-analyst correlation in forecast errors. Our primary finding is that there is a significant drop in the commonality of analysts ’ information (as proxied via the across-analyst correlation in errors about future earnings) that occurs around prior earnings announcements and that the release of most of the private information analysts ’ forecast convey is triggered by the release of public earnings announcements. Further, we find that the number of analyst forecasts revised after an earnings announcement is increasing in the degree to which individual analysts are able to convey a more