This paper provides descriptive data on standard sources of analyst forecasts used in accounting research: the Value Line Investment Survey, the Institutional Brokers Estimate System (IBES), and, toa lesser extent, the Standard & Poor's Earnings Forecaster and Zacks Investment Research. We examine the relative accuracy of seven forecast error metrics, using various combinations of Value Line and IBES forecasts of quarterly earnings per share (EPS) and actual earnings as reported by Value Line, IBES, and Compustat. (Appendix A reports the relative accuracy of a forecast error metric based on a smaller sample of Standard and Poor's forecasts of annual EPS). We find the forecast error metric that pairs the Value Line forecast EPS with the Value Line actual EPS produces the smallest absolute forecast errors. We also test the association of these forecast error metrics with threeday excess returns centered on the data of a quarterly earnings announcement. The strongest associations are obtained with the use of Value Line actual earnings and either Value Line or IBES forecast data. This suggests that the choice of actual EPS data is more crucial than the source of forecast EPS data. Our overall conclusion is that Value Line

[Prior studies of the adoption of LIFO, SFAS No. 34, and APBO No. 18 document a significant positive association between security analysts' forecast errors and the current year earnings effect of changes in accounting method. Examination of a sample of largely unstudied and diverse accounting changes, using different sources of forecasts, allows evaluation of the pervasiveness and robustness of these earlier findings. Prior work is extended by considering a variety of voluntary and mandatory changes, the extent of prior disclosure of information regarding the change, the nature of forecast revisions during the year of the change, and by comparing the bias and dispersion of forecasts in change years to that in non-change years. Tests using a firm as its own control in a matched-pairs design control for industry and firm-specific factors. Consistent with prior work, the results of this study suggest that analysts do not fully revise their forecasts for the current year's earnings effect of changes in accounting method. A positive, but generally insignificant, association between forecast errors and the earnings effect of changes is reported. Both forecast errors and the dispersion of forecasts are greater in the year of an accounting change than in non-change years, particularly in the absence of prior information regarding the change. A significant negative association is reported between the revision in analysts' forecasts and the impact of an accounting change on income. This observed relation is consistent with managers adopting accounting changes with an income smoothing motivation.]

Prior studies of the adoption of LIFO, SFAS No. 34, and APBO No. 18 document a significant positive association between security analysts' forecast errors and the current year earnings effect of changes in accounting method. Examination of a sample of largely unstudied and diverse accounting changes, using different sources of forecasts, allows evaluation of the pervasiveness and robustness of these earlier findings. Prior work is extended by considering a variety of voluntary and mandatory changes, the extent of prior disclosure of information regarding the change, the nature of forecast revisions during the year of the change, and by comparing the bias and dispersion of forecasts in change years to that in non-change years. Tests using a firm as its own control in a matched-pairs design control for industry and firm-specific factors. Consistent with prior work, the results of this study suggest that analysts do not fully revise their forecasts for the current year's earnings effect of changes in accounting method. A positive, but generally insignificant, association between forecast errors and the earnings effect of changes is reported. Both forecast errors and the dispersion of forecasts are greater in the year of an accounting change than in non-change years, particularly in the absence of prior information regarding the change. A significant negative association is reported between the revision in analysts' forecasts and the impact of an accounting change on income. This observed relation is consistent with managers adopting accounting changes with an income smoothing motivation.

This paper examines the benefits from communications made at corporate presentations to securities analysts. We examine whether firms benefit by increasing analyst following or by correcting mispricing, and whether analysts gain by acquiring information that improves the frequency or quality of their forecasts. The results show significant increases in analyst following, and significantly positive abnormal returns on the presentation date, with larger reactions observed for underpriced securities. Finally, although we find an increase in forecasting activity following the presentations, we find no evidence that analysts' post-presentation forecasts are less disperse, more accurate or less biased than their pre-presentation forecasts.

This paper examines the association between analysts' forecast errors at the earnings announcement date and the revisions to those forecasts during the preceding year. The study is an initial effort to use archival data from expert decision makers to test behavioral theories that have support in laboratory environments. Consistent with findings of conservatism in laboratory experiments, we find that analysts systematically underweight new information. This finding is most pronounced when the analysts are consistently revising their estimates downward throughout the year. Résumé. Les auteurs examinent le lien entre les erreurs prévisionnelles des analystes à la date de déclaration des bénéfices et les révisions dont ces prévisions ont fait l'objet au cours de l'exercice précédent. Il s'agit là d'une première tentative d'utilisation des données d'archives des experts en matière décisionnelle dans le but de tester les théories comportementales qui ont été démontrées en laboratoire. Conformément aux observations faites en laboratoire en ce qui a trait à la prudence, les auteurs constatent que les analystes accordent systématiquement trop peu de poids à l'information nouvelle/Cette constatation est très marquée lorsque les analystes révisent continuellement leurs estimations à la baisse au cours de l'année.