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The effects of analyst forecasts and earnings trends on perceptions of management forecast credibility

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  • Lisa M. Gaynor
  • Andrea S. Kelton

Abstract

type="main" xml:lang="en"> We examine whether analyst forecasts influence investors’ perceptions of the credibility of a good news management earnings forecast. We hypothesize that the effect of analyst forecasts will depend on whether the analyst forecast confirms management’s forecast and the extent to which management’s forecast is consistent with the prior earnings trend. Findings indicate that the positive effect of a confirming analyst forecast is greater when the management forecast is trend inconsistent than when it is trend consistent. The negative effect of a disconfirming analyst forecast does not differ based on management forecast trend consistency.

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  • Lisa M. Gaynor & Andrea S. Kelton, 2014. "The effects of analyst forecasts and earnings trends on perceptions of management forecast credibility," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 54(1), pages 189-210, March.
    • Handle: RePEc:bla:acctfi:v:54:y:2014:i:1:p:189-210
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