Publication Type

Journal Article

Version

publishedVersion

Publication Date

8-2022

Abstract

Benford’s law gives the expected frequencies of digits in tabulated data. In this study, I investigate the extent to which a sample of analysts’ earnings per share (EPS) forecasts obey Benford’s law. I conduct Benford’s law’s second digit and last-two digits tests on a sample of analyst EPS forecasts of S&P 500 firms from 1998 to 2018. Overall, I find that analysts’ EPS forecasts obey Benford’s law’s second digit test but do not obey the last-two digits test. These findings suggest that while analysts do not engage in number invention, they do engage in rounding when making EPS forecasts.

Keywords

Benford’s law, earnings per share, forecasting

Discipline

Accounting | Finance and Financial Management | Portfolio and Security Analysis

Research Areas

Financial Intermediation and Information

Publication

Accounting Research Journal

Volume

23

Issue

2

First Page

773

Last Page

785

ISSN

1030-9616

Identifier

10.33736/ijbs.4837.2022

Publisher

UNIMAS

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial-Share Alike 4.0 International License.

Additional URL

https://doi.org/10.33736/ijbs.4837.2022

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