Analysts' forecasts, information and capital market.

摘要

Essay 1: R&D expenditures and the informativeness of analyst forecast revisions. This paper examines the informativeness of analyst forecast revisions for R&D firms by focusing on the asymmetric valuation role between upward and downward revisions. Prior studies (e.g. McNichols and O'Brien (1997); Diether, Malloy and Scherbina (2002)) argue that analysts are less willing to disclose unfavorable opinions than favorable opinions, and this induces an optimistic bias in consensus forecasts that increases in the degree of earnings uncertainty. Extending this argument, I predict that, relative to downward revision, upward revision is more correlated with future earnings and helps price reflect future earnings news faster, especially in high (versus low) R&D firms whose earnings is more uncertain. The evidence is consistent with the predictions. Furthermore, the return differentials between high and low R&D portfolios (as found in Chan, Lakonishok and Sougiannis (2001)) are mitigated in the firms with upward revisions. These results provide a better understanding of the properties of forecast revisions and their implications for stock pricing.; Essay 2: Earnings management in stock financed takeovers: The role of analysts as information intermediary. This paper investigates the role of analysts as information intermediary in corporate takeovers, especially stock financed takeovers. Analysts' earnings forecasts are not inflated by abnormal accruals in merger announcement year, the earnings management proxy, but rather become more pessimistic fore stock-financed acquirers whose earnings management is more intensive. In addition, for stock-financed acquirers, the magnitude of abnormal accruals is relative smaller when analyst coverage is higher. Third, the market reaction is less negative in relation to abnormal accruals of stock-financed acquirers, which are associated with higher analyst coverage. The evidence is generally consistent with the notion that analysts play an informational role in the capital market.