Publication Type
Journal Article
Version
submittedVersion
Publication Date
12-1998
Abstract
Both bond ratings agencies and stock analysts evaluate publicly traded companies and communicate their opinions to investors. Comparing the timelines of each, it is found that Granger causality flows both ways. While most bond downgrades are preceded by declines in actual and forecasting earnings, both actual earnings and forecasts of future earnings tend to fall following downgrades. Although part of this post-downgrade forecast revision can be attributed to negative news regarding actual earnings, most appears to be reaction to the downgrade itself. Little change is found in actual earnings following upgrades. Analysts, however, tend to increase their forecasts of future earnings.
Keywords
Net income, Earnings forecasting, Analytical forecasting, Forecasting models, Bond rating, Coefficients, Causality, Finance, Stock analysis, Forecasting techniques
Discipline
Corporate Finance | Finance and Financial Management
Research Areas
Finance
Publication
Journal of Finance and Quantitative Analysis
Volume
33
Issue
4
First Page
569
Last Page
585
ISSN
0022-1090
Identifier
10.2307/2331132
Publisher
Cambridge University Press
Citation
EDERINGTON, Louis H. and GOH, Jeremy C..
Bond Rating Agencies and Stock Analysts: Who Knows What When?. (1998). Journal of Finance and Quantitative Analysis. 33, (4), 569-585.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/2200
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2307/2331132