Discussion of Why Do EPS Forecast Error and Dispersion Not Vary with Scale? Implications for Analyst and Managerial Behavior

摘要

At its basic level, C&T provide a new perspective on the behavior of the distribution of EPS forecast error magnitudes as a function of share price. Specifically, they explore several economic-based explanations, related to analyst and manager behavior, in order to understand why measures of EPS forecast error variation do not appear to vary with share price. Understanding why this lack of scale variation exists in U.S. firms not only provides new evidence related to the behavior of analysts and managers, but also enhances our understanding of the limitations and expectations inherent in this important and often studied source of data from I/B/E/S.