Featured Research

from universities, journals, and other organizations

Implications Of Past Forecasting Errors Often Underestimated

Date:
November 11, 2009
Source:
University at Buffalo
Summary:
When managers issue a forecast of their firm's earnings, they do not always take into account prior forecasting errors, according to new research.

When managers issue a forecast of their firm's earnings, they do not always take into account prior forecasting errors, according to research in the current issue of the Journal of Business Finance & Accounting.

Related Articles


Weihong Xu, assistant professor of accounting in the University at Buffalo School of Management, analyzed more than 11,000 firm-quarter observations. She found that managers often underestimate the implications of their past forecasting errors when forecasting earnings.

This underestimation of past errors can affect how the market responds to a new earnings forecast. Specifically, it can contribute to "post-earnings announcement drift;" that is, stock prices continue to drift in the direction of the initial price response to an earnings announcement.

"Managers underestimate the information in their prior forecast errors to a greater extent when they make earnings forecasts with a longer horizon," Xu says.

She notes that further study is needed to see if the underestimation is intentional on the part of management in order to provide biased forecasts.


Story Source:

The above story is based on materials provided by University at Buffalo. Note: Materials may be edited for content and length.


Journal Reference:

  1. Weihong Xu. Evidence That Management Earnings Forecasts Do Not Fully Incorporate Information in Prior Forecast Errors. Journal of Business Finance & Accounting, 2009; 36 (7-8): 822 DOI: 10.1111/j.1468-5957.2009.02152.x

Cite This Page:

University at Buffalo. "Implications Of Past Forecasting Errors Often Underestimated." ScienceDaily. ScienceDaily, 11 November 2009. <www.sciencedaily.com/releases/2009/11/091110112444.htm>.
University at Buffalo. (2009, November 11). Implications Of Past Forecasting Errors Often Underestimated. ScienceDaily. Retrieved November 24, 2014 from www.sciencedaily.com/releases/2009/11/091110112444.htm
University at Buffalo. "Implications Of Past Forecasting Errors Often Underestimated." ScienceDaily. www.sciencedaily.com/releases/2009/11/091110112444.htm (accessed November 24, 2014).

Share This


More From ScienceDaily



More Science & Society News

Monday, November 24, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Symantec Uncovers Sophisticated Spying Malware Regin

Symantec Uncovers Sophisticated Spying Malware Regin

Newsy (Nov. 24, 2014) A Symantec white paper reveals details about Regin, a spying malware of unusual complexity which is believed to be state-sponsored. Video provided by Newsy
Powered by NewsLook.com
Hackers Target Business Travellers

Hackers Target Business Travellers

Reuters - Business Video Online (Nov. 24, 2014) A newly detected malware, dubbed Darkhotel, infects hotel networks with spying software to steal sensitive data from the computers of high profile business executives, warns a leading computer security firm. Ciara Lee reports. Video provided by Reuters
Powered by NewsLook.com
Are Female Bosses More Likely To Be Depressed?

Are Female Bosses More Likely To Be Depressed?

Newsy (Nov. 24, 2014) A new study links greater authority with increased depressive symptoms among women in the workplace. Video provided by Newsy
Powered by NewsLook.com
NY Gov. on Flood Prep: 'prepared for the Worst'

NY Gov. on Flood Prep: 'prepared for the Worst'

AP (Nov. 23, 2014) First came the big storm. Now comes the big melt for residents of flood-prone areas around Buffalo. New York's governor says officials are preparing for the worst as the temperature is expected to rise and potentially melt several feet of snow. (Nov. 23) Video provided by AP
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:

Strange & Offbeat Stories


Science & Society

Business & Industry

Education & Learning

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins