Analyst reputation and the issuance of disaggregated earnings forecasts to I/B/E/S

Yonca Ertimur (), William J. Mayew () and Stephen R. Stubben ()
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Yonca Ertimur: Duke University
William J. Mayew: Duke University
Stephen R. Stubben: The University of North Carolina at Chapel Hill

Review of Accounting Studies, 2011, vol. 16, issue 1, No 2, 29-58

Abstract: Abstract Although sell-side analysts privately forecast revenues and expenses when producing earnings forecasts, not all analysts choose to provide I/B/E/S with earnings forecasts disaggregated into revenues and expenses. We investigate the role of reputation in explaining this decision. We find that analysts without established reputations are more likely than reputable analysts to issue disaggregated earnings forecasts to I/B/E/S, consistent with I/B/E/S exposure benefits accruing to analysts seeking to establish a reputation. Among less reputable analysts, those with high ability are more likely to disaggregate, consistent with this group reaping greater benefits from the exposure I/B/E/S provides. Additional tests support our primary hypotheses. Among less reputable analysts, those who disaggregate are more (less) likely to be promoted (demoted or terminated). The stock market responds similarly, with more weight assigned to earnings forecast revisions provided by analysts who disaggregate their earnings forecasts.

Keywords: Disaggregated earnings forecasts; Revenue forecasts; Security analysts; Reputation (search for similar items in EconPapers)
JEL-codes: D83 G14 J44 (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1007/s11142-009-9116-5

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