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Do Analysts Who Understand Accounting Conservatism Exhibit Better Forecasting Performance?

Jung, J. H., Lim, S.S., Pae, J. and Yoo, C.Y. (2017). Do Analysts Who Understand Accounting Conservatism Exhibit Better Forecasting Performance?. Journal of Business Finance and Accounting, 44(7-8), pp. 953-985. doi: 10.1111/jbfa.12254

Abstract

This study investigates the performance of analysts when they match the asymmetric timeliness of their earnings forecast revisions (i.e., asymmetric forecast timeliness) with the asymmetric timeliness of firms’ reported earnings (i.e., asymmetric earnings timeliness). We find that better timeliness-matching analysts produce more accurate earnings forecasts and elicit stronger market reactions to their forecast revisions. Further, better timeliness-matching analysts issue less biased earnings forecasts, more profitable stock recommendations and have more favorable career outcomes. Overall, our results indicate that analysts’ ability to incorporate conditional conservatism into their earnings forecasts is an important reflection of analyst expertise and professional success.

Publication Type: Article
Additional Information: This is the peer reviewed version of the following article: Jung, J. H., Lim, S.S., Pae, J. & Yoo, C.Y. (2017). Do Analysts Who Understand Accounting Conservatism Exhibit Better Forecasting Performance?. Journal of Business Finance and Accounting, 44(7-8), pp. 953-985., which has been published in final form at http://dx.doi.org/10.1111/jbfa.12254. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving
Publisher Keywords: Conditional Conservatism; Asymmetric Timely Loss Recognition; Equity Analyst; Forecasting Performance; Stock Recommendation; Career Outcome
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HG Finance
Departments: Cass Business School > Finance
URI: http://openaccess.city.ac.uk/id/eprint/17222
[img] Text - Accepted Version
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