Analyst estimation revision clusters and corporate events,Part I

Summary This paper uses periods of unusually heavy earnings estimate revision activity by analysts to assess the relative usefulness of corporate information events (CIEs) in firm valuation. Because accounting information is more readily available, newsworthy and accessible, we hypothesize that CIEs that focus on financial statement information trigger greater analyst revision activity over a shorter period of time than CIEs that offer strategic or “soft” information. Our results are consistent with this hypothesis. In Part II, we examine investor response to revision clusters that accompany different CIEs.We thank the Editor, an anonymous referee, Joe Cooper, Todd Doersch, Tony Greig, Kent Konkol and Marc Sievers for helpful suggestions and discussions. We also thank Mehmet Ozbilgin and James Su for programming during the planning phase of this project, and Jinyoung Park for research assistance during its execution. We are very grateful to Thomson Financial, CCBN and Reuters Data for providing data used in this study. Bagnoli and Watts thank the Krannert Graduate School of Management andPurdue University for financial support.