We provide evidence that conditional conservatism could be better captured in linearinformation models (LIMs), which largely rely on analysts’ forecasts, if analysts wouldadjust their optimistic forecast for the asymmetric timeliness of earnings. Sinceadjusting the forecast requires...

We predict and find that revisions are driven by the same determinants as forecast errors. In addition to the intuitive impact of news on revisions, we show that a second major driver of revisions is the change in analyst incentives to systematically bias their earnings forecasts. Taken...

We introduce a new way to measure the forecast effort that analysts devote to their earnings forecasts by measuring the analyst's general effort for all covered firms. While the commonly applied effort measure is based on analyst behavior for one firm, our measure considers analyst behavior for...

Earnings forecasts are ubiquitous in today’s financial markets. They are essential indicators of future firm performance and a starting point for firm valuation. Extremely inaccurate and overoptimistic forecasts during the most recent financial crisis have raised serious doubts regarding the...