We examine whether management earnings forecast errors exhibit serial correlation and how analysts understand the serial correlation property of management forecast errors. Management forecast errors should not exhibit serial correlation if managers efficiently process information in prior...

We examine the extent to which current operating cash flows are incorporated in future earnings targets in executive compensation. Using target and actual compensation earnings per share (EPS) disclosed in proxy statements for large U.S. public companies, we find that revision of the following...

When information asymmetry is a major market friction, earnings forecasts can lead to higher price efficiency even after the information in forecasts completely dissipates upon earnings realizations. We show this in an experimental market that features information asymmetry (i.e., some traders...