Analyst Forecasting Ability and the Stock Price Reaction to Forecast Revisions

Chul W. Park and Earl K. Stice
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Chul W. Park: The Hong Kong University of Science & Technology
Earl K. Stice: Brigham Young University

Review of Accounting Studies, 2000, vol. 5, issue 3, No 4, 259-272

Abstract: Abstract We empirically identifysuperior analysts using their past forecasting track record fora specific firm's earnings and demonstrate that subsequent forecastannouncements by these superior analysts have a greater impacton security prices than do the forecasts of other analysts. Wefind that, in our sample, the price effects of this firm-specificforecasting ability do not spill over to other firms followedby the same analyst. We also demonstrate that an analyst's forecastingability with respect to the earnings of a certain firm is relativelymore important in the period immediately preceding an earningsannouncement by that firm.

Keywords: Track Record; Price Effect; Analyst Forecast; Price Reaction; Security Price (search for similar items in EconPapers)
Date: 2000
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DOI: 10.1023/A:1009668711298

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