Using a value-weighted rather than an equally weighted regression, Easton and Sommers (2007) show that the upward bias in the risk premium implied by analysts' earnings forecasts falls to 1.6%, but remains statistically and economically significant. In this paper, we argue that any estimation of...

This paper compares and contrasts two accounting information systems, the aggregate earnings system and the disaggregated cash flow/accrual system, examining their relative performance in stock valuation and in forecasting of earnings. It finds, in general, that the forecasts of earnings and...

This paper articulates the links between relevance of an earnings component in forecasting (abnormal) earnings and its relevance in valuation in a nonlinear framework. The analysis shows that forecasting relevance does not imply valuation relevance even though valuation irrelevance is implied by...

Existing accounting-based forecasting models of earnings either do not fully consider information that is contained in stock prices or use an ad hoc specification that is not based on rigorous valuation theory. In this paper, we develop an earnings forecasting model built on the theoretical...

In this paper, we employ the earnings model developed in Ashton and Wang (2013) to forecast the one- to three-year ahead earnings of individual companies. We find that the model produces forecasts of future earnings that are less biased and more informative than both the consensus analysts'...

Reducing the amount of private information in corporate disclosures does not necessarily reduce the accuracy of analysts’ forecasts. This paper applies model-based earnings forecasts as a benchmark that is immune from disclosure of private information and evaluates the relative performance of...