Analyst Forecasting Ability and the Stock Price Reaction to Forecast Revisions |
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Authors: | Chul W Park Earl K Stice |
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Institution: | (1) The Hong Kong University of Science & Technology, Hong Kong;(2) Brigham Young University, USA |
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Abstract: | We empirically identifysuperior analysts using their past forecasting track record fora specific firm's earnings and demonstrate that subsequent forecastannouncements by these superior analysts have a greater impacton security prices than do the forecasts of other analysts. Wefind that, in our sample, the price effects of this firm-specificforecasting ability do not spill over to other firms followedby the same analyst. We also demonstrate that an analyst's forecastingability with respect to the earnings of a certain firm is relativelymore important in the period immediately preceding an earningsannouncement by that firm. |
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