Monday, May 13, 2013

Reaction to Non-Earnings News and Analysts' Skill

RUBIN Amir, SEGAL Benjamin, SEGAL Dan
Read the working paper
INSEAD Working Paper 2013/61/AC

We analyze corporate 8-K releases and find that while approximately 70% of analysts revise their forecast following 8-K earnings releases, only 14% of analysts revise their forecasts after non-earnings 8-K releases. Comparing forecasts that are revised and forecasts that remain unchanged following non-earnings 8-K releases, we find that revised forecasts are associated with lower forecast errors. We also find that analysts who revise their forecasts after non-earnings 8-K releases have more accurate and timelier forecasts in subsequent periods. Overall, our findings indicate that nonearnings 8-K releases are informative about future earnings, and that analysts who revise their forecast after these releases have greater skill.