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| Author: | Hugon, A. Muslu, V. |
| Title: | Market demand for conservative analysts |
| Journal: | Journal of Accounting & Economics
2010 : MAY, VOL. 50:1, p. 42-57 |
| Index terms: | earnings forecasting markets financial analysis empirical research |
| Language: | eng |
| Abstract: | Inefficient forecasts are resulted by sell-side analysts who, on balance, have incentives to emphasize good company news and downplay the bad. In this study, this behavior is conjectured to generate a demand for forecasts from conservative analysts who unwind this pattern, at least in part, which results in more efficient forecasts. For investigation, a measure of analyst conservatism is introduced, and the market reaction to analysts' forecast revisions conditioned on their past levels of conservatism is assessed. The findings reveal a stronger market reaction to forecast revisions by more conservative analysts, and that this result is heightened for companies with greater institutional investor following. |
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