Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5086539 | Journal of Accounting and Economics | 2016 | 23 Pages |
Abstract
Using management earnings forecasts over the period 1996-2010, I find that the sensitivity of forecast revisions to contemporaneous stock returns is increasing in the amount of investors' private information in prices. This effect remains after controlling for various confounds and is robust to the use of mutual fund redemptions as a shock to price changes that is exogenous to fundamental news. Furthermore, investors' private information helps managers improve their forecast accuracy. Together, these findings suggest that stock prices contain information that managers do not otherwise have regarding firms' fundamentals, and that managers incorporate this information in their earnings forecasts.
Keywords
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Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Luo Zuo,