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Korean Journal of Financial Studies 2011;40(3):431-459.
Published online June 30, 2011.
How Do Management Earnings Forecasts Affect Analyst Earnings Forecast Revisions?
Soo Young Kwon, Seung Weon Yoo, Mun Ho Hwang
경영자 이익예측정보와 재무분석가 이익예측수정
권수영, 유승원, 황문호
This paper investigates the analysts` forecast revision behavior after management forecasts and the information properties of management forecasts that determine their revision behaviors. The paper examines 255 management forecasts on operation earnings and the analysts forecasts revision from year 2002 to year 2008. The main results are as follows. First, about 70% of the analysts modify their forecasts with the same direction of management forecasts, and the revision follows 51.5% of the management forecasts in size. It implies that management forecasts significantly influence the analysts` forecast revision. Second, the analysts are more likely to follow management forecasts if (i) the difference between analyst forecasts and management forecasts is large, (ii) management forecasts are more conservative, (iii) the earnings are more persistent, (iv) the discretionary earnings are smaller, (v) the forecast horizon is, shorter, and (vi) earnings quality is better. The results suggest that the analysts revise their forecasts based not only the information properties of management forecasts but the firms` earnings quality. This paper provides additional empirical evidence that the analysts do not simply follow management forecasts, but take into consideration the information quality of management forecasts and firms` information environments. This paper also provides the research results on the analysts` decision process in terms of the interaction between the analysts and firms` management forecasts.
Key Words: 경영자 이익예측,예측정확성,예측차이,이익의 질,재무분석가 예측수정,Analysts Forecast Revision,Earnings Quality,Forecast Accuracy,Forecasts News,Management Earnings Forecasts
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