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Title:A Reexamination of Bias in Management Earnings Forecasts
Author(s):Choi, Jong-Hag
Doctoral Committee Chair(s):Ziebart, David A.
Department / Program:Accountancy
Degree Granting Institution:University of Illinois at Urbana-Champaign
Subject(s):Business Administration, Accounting
Abstract:This study finds that short-horizon MEF are pessimistically biased , while long-horizon MEF are optimistically biased. Previous claims that management earnings forecasts are unbiased could be driven by the cancellation effect that occurs between long-term optimistic bias and short-term pessimistic bias. The magnitude of bias is associated with three ex-ante factors---unexpected earnings, forecast horizon and firm size. Although the magnitude of the bias is predictable with these three factors, it seems that investors naively respond to bias component in the forecasts at MEF announcement. The bias in management earnings forecasts causes subsequent stock price reversal when subsequent earnings report are announced. In conclusion, initially, the market mechanistically responds to the biased MEF and subsequently corrects itself by reversing the previous overreaction.
Issue Date:2000
Description:143 p.
Thesis (Ph.D.)--University of Illinois at Urbana-Champaign, 2000.
Other Identifier(s):(MiAaPQ)AAI9955599
Date Available in IDEALS:2015-09-28
Date Deposited:2000

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