Journal of Financial Economics Vol. 100 No. 2 2011
The disparity between long-term and short-term forecasted earnings growth☆
open access
Abstract
We find the disparity between long-term and short-term analyst forecasted earnings growth is a robust predictor of future returns and long-term analyst forecast errors. After adjusting for industry characteristics, stocks whose long-term earnings growth forecasts are far above or far below their implied short-term forecasts for earnings growth have negative and positive subsequent risk-adjusted returns along with downward and upward revisions in long-term forecasted earnings growth, respectively. Additional results indicate that investor inattention toward firm-level changes in long-term earnings growth is responsible for these risk-adjusted returns.
- DOI
- 10.1016/j.jfineco.2010.10.015
- Volume
- 100
- Issue
- 2
- Pages
- 424-442
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref