On the Relationship between Analyst Reports and Corporate Disclosures: Exploring the Roles of Information Discovery and Interpretation
By Xia Chen, Qiang Cheng, Kin Lo. 2010
186 citations recorded by the source corpus.
We examine the relationship between analyst research and corporate earnings announcements to explore the relative importance of information discovery versus interpretation of previously released information. Using equity market reaction to capture information content, we find that information discovery (interpretation) dominates in the week before (after) firms announce their earnings. In addition, we find that the interpretation role increases in importance with the difficulty of financial accounting information. Analysis of all weeks surrounding earnings announcements shows that the information discovery role is overall more important. We are able to reconcile this result with the opposite finding in Francis et al. (2002).
Subfields: Accounting, Finance
View Paper: https://www.semanticscholar.org/paper/d5094619c9251e17966aa3e855c49d3247996a34
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Citations in the corpus
- Does the Scope of the Sell-Side Analyst Industry Matter? An Examination of Bias, Accuracy, and Information Content of Analyst Reports: Does the Scope of the Sell-Side Analyst Industry Matter? (2017, unknown): “…findings are also consistent with firm-level evidence suggesting that analysts serve an “information discovery” role in the period leading up to the earnings announcement (Chen et al. (2010)) and suggest that this process is also a function of the extent of overall analyst presence in an industry.”
- Seeing is believing: analysts’ corporate site visits (2016, background): “Although this research infers that analysts rely on their information acquisition (e.g., Chen et al. 2010), direct evidence is limited.”
- Analyst Information Discovery and Interpretation Roles: A Topic Modeling Approach (2018, unknown): “A few studies compare the relative value of the analyst information roles based on the market reaction to analyst earnings forecasts and stock recommendations (Ivković and Jegadeesh 2004; Chen et al. 2010; and Livnat and Zhang 2012).”
- Common Auditors in M&A Transactions (2016, unknown): “Our third measure of uncertainty is based on the target firm’s R&D intensity (Aboody and Lev, 2000; Huddart and Ke, 2010; Chen et al., 2010).”