Information Content of Analysts' Stock Ratings and Earnings Forecasts in the Presence of Management Earnings Forecasts

Koji Ota
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Koji Ota: Faculty of Commerce, Kansai University, Japan

The Japanese Accounting Review, 2012, vol. 2, 87-116

Abstract: This paper evaluates the informativeness of analysts’ ratings and earnings forecast information contained in analyst reports beyond what is publicly provided by management earnings forecasts. Using only analyst reports that have been released practically simultaneously with management forecasts, I find that both analysts’ ratings and earnings forecasts have incremental information content conditional on management forecasts. Further analysis also reveals that analysts’ earnings forecasts are significantly more accurate than concurrently-announced management earnings forecasts. Overall, the findings in this paper present strong evidence that analysts offer informational value to the market beyond information that is provided by company management.

Keywords: Analysts’ Roles in Financial Markets; Analysts' Stock Ratings; Analysts' Earnings Forecasts; Management Earnings Forecasts (search for similar items in EconPapers)
JEL-codes: D82 G14 G24 M41 (search for similar items in EconPapers)
Date: 2012
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