How Do Quarterly Earnings Announcements Affect Analyst Forecasts?

초록

This paper examines the effect of quarterly earnings announcements on analysts’ forecast revisions and their accuracy. In 2000, new regulation of the financial markets in Korea began requiring firms to disclosure quarterly accounting reports. If quarterly earnings announcements provide additional information and analysts use those information to form their new forecast, there should be difference in forecast properties around earnings announcements. Empirical results show a significant increase in the number of analyst forecast revisions following the earnings announcements. Results also show that forecasts issued immediately after the earnings announcement are revised by large magnitude and are more accurate. However, revisions issued relatively long after earnings announcements have indifferent forecast accuracy from forecast revisions immediately after the announcements. These results suggest that quarterly announcements provide predictive information about future earnings, and new information contained in earnings announcements are more likely reflected by those forecast issued immediately after earnings announcements.

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