Higher accruals are associated with lower subsequent earnings. We show this phenomenon can be explained by the way sales, profits, and working capital respond to changes in a firm's product markets. Empirically, high accruals predict high subsequent sales growth but a long-lasting drop in both...

We investigate the implications of voluntary forecasting activity on the persistence of actual reported figures. We further explore the impact of managements' error direction (i.e. pessimistic versus optimistic manager) on the persistence of actual reported figures. We finally explore whether...

The aim of this study is to analyze the relationship between earnings management and model-based earnings forecast accuracy. We provide evidence that firms with higher level of earnings management tend to exhibit larger forecast errors, i.e., earnings forecast accuracy for these firms is lower....

I apply Wang's (2012) earnings forecasting framework to examine if the lower persistence of accruals in an unrestricted model of earnings dynamics (UM) implies the superiority of a restricted model (RM). In particular, I specify reported earnings in terms of respective expected earnings of UM...

This paper assesses the performance of securities analysts in forecasting the future earnings of intangible firms. The assessment is relative to extrapolative time-series models of earnings forecasts. The paper's results show that the forecast errors produced by both analysts and extrapolative...

This paper studies whether illiquidity affects the predictability of fundamental valuation variables. Firm-level, cross-sectional analyses show that returns of illiquid stocks contain less information about their firm's future earnings growth compared to those of more liquid stocks. A natural...

We develop a measure of how information events impact investors' perceptions of risk that is broadly applicable and simple to implement. We derive this measure from an option-pricing model where investors anticipate an announcement that simultaneously conveys information on the announcer's...

This study examines the stock-price reactions to analyst forecast revisions around earnings announcements to test whether pre-announcement forecasts reflect analysts' private information or piggybacking on confounding events and news. We find that management earnings forecasts influence the...