Assessing investors’ earnings expectations: the contextual usefulness of composite forecasts

May H. Lo, Wenjuan Xie and Le (Emily) Xu

Asia-Pacific Journal of Accounting & Economics, 2019, vol. 26, issue 3, 223-240

Abstract: This study constructs composite forecasts and evaluates their contextual usefulness as a proxy for investors’ expectations of annual earnings. Our empirical tests utilize composites of three forecast sources: financial analysts’, time-series and security-price based forecasts. Our full sample results support the incremental usefulness of composite forecasts, over and above that of any of the three forecast sources. Moreover, results from partitioned subsamples show that the usefulness of composite forecasts is contextual. Composite forecasts are a better proxy for investors’ earnings expectations when (1) the information environment is relatively poor; or (2) firms experience negative performance in the prior year.

Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/16081625.2018.1491316 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:raaexx:v:26:y:2019:i:3:p:223-240

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/raae20

DOI: 10.1080/16081625.2018.1491316

Access Statistics for this article

Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

More articles in Asia-Pacific Journal of Accounting & Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().