Publication Type
Journal Article
Version
submittedVersion
Publication Date
5-2011
Abstract
We find the disparity between long-term and short-term analyst forecasted earnings growth is a robust predictor of future returns and long-term analyst forecast errors. After adjusting for industry characteristics, stocks whose long-term earnings growth forecasts are far above or far below their implied short-term forecasts for earnings growth have negative and positive subsequent risk-adjusted returns along with downward and upward revisions in long-term forecasted earnings growth, respectively. Additional results indicate that investor inattention toward firm-level changes in long-term earnings growth is responsible for these risk-adjusted returns.
Keywords
Analyst forecasts, Return predictability
Discipline
Finance and Financial Management | Portfolio and Security Analysis
Research Areas
Finance
Publication
Journal of Financial Economics
Volume
100
Issue
2
First Page
424
Last Page
442
ISSN
0304-405X
Identifier
10.1016/j.jfineco.2010.10.015
Publisher
Elsevier
Citation
DA, Zhi and WARACHKA, Mitchell Craig.
The Disparity Between Long-Term and Short-Term Forecasted Earnings Growth. (2011). Journal of Financial Economics. 100, (2), 424-442.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/3203
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/10.1016/j.jfineco.2010.10.015