| Author: | Ou, J. A. Sepe, J. F. |
| Title: | Analysts Earnings Forecasts and the Roles of Earnings and Book Value in Equity Valuation |
| Journal: | Journal of Business Finance and Accounting
2002 : VOL. 29:3-4, p. 287-316 |
| Index terms: | VALUATION EARNINGS FORECASTING |
| Language: | eng |
| Abstract: | This study examines the effect of the degree of association between current earnings and expected future earnings on the relative importance of earnings and book value for explaining equity price. Consensus analysts forecasts of one-year-ahead earnings are used to proxy for expected future earnings and are compared to reported current earnings to measure the degree of the association. The authors find that the value-relevance of current earnings negatively correlates with the extent to which consensus analysts forecasts deviate from current earnings. The authors also find that the incremental explanatory power of book value for equity price positively correlates with this measure. |
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