Search engine for discovering works of Art, research articles, and books related to Art and Culture
Javascript must be enabled to continue!
Crowdsourced Forecasts and the Market Reaction to Earnings Announcement News
View through CrossRef
ABSTRACT
This study examines whether crowdsourced forecasts of earnings and revenues help investors unravel bias in earnings announcement news, which is commonly derived from analyst forecasts. Our results suggest that investors, on average, understand and price the predictive signals reflected in crowdsourced forecasts about the bias in analyst-based earnings and revenue surprises. Using the staggered addition of firms to the Estimize platform, we find that crowdsourced coverage is associated with reductions in the mispricing of forecast bias and declines in earnings announcement premia. We further find some evidence that managers use income-increasing accruals to meet the crowdsourced forecast benchmark and that they respond to crowdsourced coverage through increased downward earnings and revenue guidance. Overall, we conclude that user-generated content on crowdsourced financial information platforms helps investors discount biases in traditional equity research and thereby better process the news in earnings announcements.
JEL Classifications: G14; G20; M41.
Title: Crowdsourced Forecasts and the Market Reaction to Earnings Announcement News
Description:
ABSTRACT
This study examines whether crowdsourced forecasts of earnings and revenues help investors unravel bias in earnings announcement news, which is commonly derived from analyst forecasts.
Our results suggest that investors, on average, understand and price the predictive signals reflected in crowdsourced forecasts about the bias in analyst-based earnings and revenue surprises.
Using the staggered addition of firms to the Estimize platform, we find that crowdsourced coverage is associated with reductions in the mispricing of forecast bias and declines in earnings announcement premia.
We further find some evidence that managers use income-increasing accruals to meet the crowdsourced forecast benchmark and that they respond to crowdsourced coverage through increased downward earnings and revenue guidance.
Overall, we conclude that user-generated content on crowdsourced financial information platforms helps investors discount biases in traditional equity research and thereby better process the news in earnings announcements.
JEL Classifications: G14; G20; M41.
Related Results
Isolation, characterization and semi-synthesis of natural products dimeric amide alkaloids
Isolation, characterization and semi-synthesis of natural products dimeric amide alkaloids
Isolation, characterization of natural products dimeric amide alkaloids from roots of the Piper chaba Hunter. The synthesis of these products using intermolecular [4+2] cycloaddit...
The Impact of Earnings Quality on the Stock Returns of Listed Manufacturing Companies in the Colombo Stock Exchange
The Impact of Earnings Quality on the Stock Returns of Listed Manufacturing Companies in the Colombo Stock Exchange
The earnings of a company is a very important indicator of firm performance, since it communicates information about the value creating ability of the company to its stakeholders. ...
ProPower: A new tool to assess the value of probabilistic forecasts in power systems management
ProPower: A new tool to assess the value of probabilistic forecasts in power systems management
Objective and BackgroundEnsemble weather forecasts have been promoted by meteorologists for use due to their inherent capability of quantifying forecast uncertainty. Despite this a...
A Critical Review of Research on Ethics of Crowdsourced Translation at Home and Abroad (2009–2024)
A Critical Review of Research on Ethics of Crowdsourced Translation at Home and Abroad (2009–2024)
With the rapid development of global crowdsourced translation practices, research on the phenomenon’s multifaceted ethical dimensions has steadily progressed. This paper presents t...
Forecasting corporate earnings: integrating financial ratios and earnings management predictors
Forecasting corporate earnings: integrating financial ratios and earnings management predictors
Purpose
This study aims to develop the traditional financial ratio-based earnings prediction model and the earnings management predictors-based prediction model...
THE DETERMINANT FACTORS OF EARNINGS QUALITY AND ECONOMIC CONSEQUENCES
THE DETERMINANT FACTORS OF EARNINGS QUALITY AND ECONOMIC CONSEQUENCES
The research aimed to discuss the determinant factors of earnings quality and the economic consequences in Indonesian capital market. Those factors are innate, performance, company...
Makna Voice Over dalam Pemberitaan Feature di Televisi
Makna Voice Over dalam Pemberitaan Feature di Televisi
Abstract. Voice Over or what is known as VO is being discussed a lot, not only about the profession, but also from the industry side and the various voice over techniques used. Due...
Earnings smoothing and the underpricing of seasoned equity offerings
Earnings smoothing and the underpricing of seasoned equity offerings
PurposeThe purpose of this paper is to examine the impact of earnings smoothing on the underpricing of seasoned equity offerings (SEOs). It aims to investigate whether earnings smo...