Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5093007 | Journal of Contemporary Accounting & Economics | 2006 | 18 Pages |
Abstract
The nature of analysts' earnings forecast dispersion and what drives a negative association between the dispersion and the magnitude of the earnings response coefficient have been subjects of active debate among accounting researchers. In an attempt to shed some light on this debate, we test a private information search hypothesis which posits that investors' private information search activity will reduce uncertainty about future firm performance, but that the search is less likely to influence the level of noise in earnings. Our result suggests that the previously documented negative association between the two variables is driven more by earnings noise, rather than by fundamental uncertainty about future firm performance.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Business, Management and Accounting (General)
Authors
Jong-Hag Choi, Tony Kang, Yong Keun Yoo,