Team earnings forecasting

Lawrence D. Brown, Jean Hugon

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

While brokerage houses use both teams of sell-side analysts and individual analysts to conduct earnings research, there is no empirical research examining whether teams and individuals differ with regard to their forecasting performance or purpose. We first examine the most-often researched dimension of forecasting performance, earnings forecast accuracy, and show that teams are less accurate than individual analysts in general and their own individual team members in particular. We conjecture that teams focus their efforts on an alternative dimension of forecasting performance, timeliness, and show that team forecasts are timelier than those of individual analysts in general and their own individual team members in particular. Consistent with the notion that teams trade-off forecast accuracy for timeliness to comply with a market research demand, we show that team forecast revisions are associated with larger market responses than those of individuals. Finally, we illuminate the nature of team assignments by documenting that the firms that teams follow are in greater financial distress and larger in size.

Original languageEnglish (US)
Pages (from-to)587-607
Number of pages21
JournalReview of Accounting Studies
Volume14
Issue number4
DOIs
StatePublished - Sep 2009
Externally publishedYes

Fingerprint

Earnings forecasting
Analysts
Forecasting performance
Timeliness
Forecast accuracy
Empirical research
Trade-offs
Assignment
Financial distress
Market research
Earnings forecasts
Brokerage
Forecast revisions
Market response
Sell-side analysts

Keywords

  • Accuracy
  • Earnings forecasts
  • Teams
  • Timeliness

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Accounting

Cite this

Team earnings forecasting. / Brown, Lawrence D.; Hugon, Jean.

In: Review of Accounting Studies, Vol. 14, No. 4, 09.2009, p. 587-607.

Research output: Contribution to journalArticle

Brown, Lawrence D. ; Hugon, Jean. / Team earnings forecasting. In: Review of Accounting Studies. 2009 ; Vol. 14, No. 4. pp. 587-607.
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