Changes in analysts' information around earnings announcements

Orie E. Barron, Donal Byard, Oliver Kim

Research output: Contribution to journalArticlepeer-review

111 Scopus citations

Abstract

In this study we examine changes in the precision and the commonality of information contained in individual analysts' earnings forecasts, focusing on changes around earnings announcements. Using the empirical proxies suggested by the Barron et al. (1998) model that are based on the across-analyst correlation in forecast errors, we conclude that the commonality of information among active analysts decreases around earnings announcements. We also conclude that the idiosyncratic information contained in these individual analysts' forecasts increases immediately after earnings announcements, and that this increase is more significant as more analysts revise their forecasts. These results are consistent with theories positing that an important role of accounting disclosures is to trigger the generation of idiosyncratic information by elite information processors such as financial analysts (Kim and Verrecchia 1994, 1997).

Original languageEnglish (US)
Pages (from-to)821-846
Number of pages26
JournalAccounting Review
Volume77
Issue number4
DOIs
StatePublished - Oct 2002

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

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