This study examines whether short-sellers and financial analysts develop complementary information about future earnings and returns and assesses whether investors can improve predictions made by each of these intermediaries using information provided by the other. The first main result is that the relative short interest ratio (shares sold short divided by total shares outstanding) contains information that is useful for predicting future earnings, beyond (i.e., incremental to) the information in analyst forecasts. I also find that analysts do not fully incorporate short interest information into their forecasts and demonstrate that analyst forecasts can be improved (i.e., can be made to be less biased and more accurate) by adjusting for short interest information. The second main result is that analyst forecast revisions contain information that is useful for predicting future abnormal returns, beyond the information in the relative short interest ratio. I demonstrate that portfolios of stocks formed based on consistent signals from short-sellers and analysts produce abnormal return spreads that are significantly larger than spreads produced by portfolios formed using signals from short-sellers alone. Collectively, the evidence suggests that short-sellers and analyst provide complementary information about future firm performance that is useful to investors.

This study examines whether short-sellers and financial analysts develop complementary information about future earnings and returns and assesses whether investors can improve predictions made by each of these intermediaries using information provided by the other. The first main result is that the relative short interest ratio (shares sold short divided by total shares outstanding) contains information that is useful for predicting future earnings, beyond (i.e., incremental to) the information in analyst forecasts. I also find that analysts do not fully incorporate short interest information into their forecasts and demonstrate that analyst forecasts can be improved (i.e., can be made to be less biased and more accurate) by adjusting for short interest information. The second main result is that analyst forecast revisions contain information that is useful for predicting future abnormal returns, beyond the information in the relative short interest ratio. I demonstrate that portfolios of stocks formed based on consistent signals from short-sellers and analysts produce abnormal return spreads that are significantly larger than spreads produced by portfolios formed using signals from short-sellers alone. Collectively, the evidence suggests that short-sellers and analyst provide complementary information about future firm performance that is useful to investors.

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The current study investigates the relationship between analyst coverage and the moments of the return distribution. Results are presented to support a time-varying pattern in the premiums associated with the higher moments of returns, particularly for the fourth moment of the distribution. In addition, evidence is presented to suggest that there exists some ex-post and ex-ante forecasting ability based on the use of the higher moments of the return distribution as stock selection criteria. In the second half of the study, results show that as the number of analysts following a firm increases, the third and fourth moments of the return distribution are impacted, with the former being reduced and the latter increased. In addition, the initiation and discontinuation of analyst coverage are both found to be related to the higher moments of the return distribution. The initiation of analyst coverage is associated with a reduction in skewness and an increase in excess kurtosis, while the discontinuation of coverage results in an increase in both of the higher moments of the distribution. Taken together, the results of the two main questions in the current research study suggest that investors seeking higher distributional moments of returns may favor neglected firms over their followed counterparts, particularly in periods of heightened market volatility. In addition, the results show that the two main competing hypotheses concerning the causes of non-normal security returns, namely firm information structure and security liquidity, both impact the higher moments of the return distribution. / Thesis (Ph.D, Management) -- Queen's University, 2010-08-26 12:18:47.528

Thesis (Ph. D.)--University of Texas at Austin, 2006. / Vita. Includes bibliographical references.

abstract: When managers provide earnings guidance, analysts normally respond within a short time frame with their own earnings forecasts. Within this setting, I investigate whether financial analysts use publicly available information to adjust for predictable error in management guidance and, if so, the explanation for such inefficiency. I provide evidence that analysts do not fully adjust for predictable guidance error when revising forecasts. The analyst inefficiency is attributed to analysts' attempts to advance relationship with the managers, analysts' compensation not tie to forecast accuracy, and their forecasting ability. Finally, the stock market acts as if it does not fully realize that analysts respond inefficiently to the guidance, introducing mispricing. This mispricing is not fully corrected upon earnings announcement. / Dissertation/Thesis / Ph.D. Accountancy 2012

M.Phil. (Information Management) / This study was aimed at the discovery of in corporate advisory networks who act as agents to share information and knowledge. In the current competitive and often uncertain economic business environment, savvy executives need to leverage off the expertise of their company employees in order to service their customers effectively and remain competitive. Since not all employees in the company have expert knowledge, executives need to discover the advisory networks of expert employees embedded in formal organisational structures and encourage them to share and transfer their expert knowledge to novices and/or less experienced employees. In light of the current argument, a diagnostic technique known as social network analysis (SNA) was used to map out and measure the advisory relational X-ray patterns within organisational departments and across to other functional business units. Once the patterns are discovered and the key expert networked employees identified, knowledge sharing interventions are introduced to facilitate experts to share and transfer their information, knowledge, insights and experiences to other less knowledgeable employees within the departments and across to other functional areas in the organisation. The overall objective of this study is therefore to utilise the SNA technique to discover the experts in the corporate advisory networks whom will act as agents to facilitate information and knowledge sharing in the organisation to improve other employees’ work performance thereby enabling the organisation to meet and even exceed its strategic objectives...

Thesis advisor: Mark Bradshaw / Managers prioritize questions from favorable analysts during earnings announcement conference calls, reinforcing analysts’ incentives to be optimistic. However, managers also interact with unfavorable analysts on calls, and, when they do, absolute announcement returns are larger. I seek to understand why managers interact with unfavorable analysts. I find that unfavorable analysts attenuate their negative views after these interactions with managers. Additionally, the stock price response is stronger for forecasts from managers who regularly interact with unfavorable analysts, consistent with enhanced credibility of these managers. Finally, I use peer firm restatement announcements as exogenous shocks to investors’ assessment of a firm’s accounting quality, and I find that nonrestating firms with managers who regularly interact with unfavorable analysts experience attenuated negative returns, relative to other nonrestating peers. Overall my findings are consistent with managers’ interactions with unfavorable analysts providing significant benefits to the firm, such as resolving analysts’ concerns and increasing managers’ credibility. / Thesis (PhD) — Boston College, 2023. / Submitted to: Boston College. Carroll School of Management. / Discipline: Accounting.

This dissertation investigates the effects of changes in the accounting environment on the capital markets. Included are three manuscripts, each of which, make an important contribution to the accounting literature. The first two manuscripts investigate the impact and importance of analysts' forecasts. The third manuscript documents the impact of eliminating an important accounting disclosure. This dissertation makes the following contributions to the accounting literature. The first manuscript documents that investor skepticism towards meet/beat firms appears to have been a temporary phenomenon and investors have resumed rewarding firms that meet/beat analysts' earnings expectations. Further, the study provides evidence that changes in the analyst forecasting environment also contributed to this temporary decline implying that the scandals did not have as strong of an effect on investors' confidence in earnings as previously believed. The second manuscript contributes to the accounting literature by documenting the importance of meeting/beating cash flow forecasts to participants in the debt markets. Finally, the third manuscript contributes to the existing literature regarding the value relevance of the IFRS -- U.S.GAAP reconciliation by documenting a significant decrease in publicly available information to equity investors at the first reporting period following the SEC's decision to eliminate the reconciliation. All of these manuscripts extend what is currently known about the importance of public disclosures to capital market participants. / Ph. D.

Denna studie granskar aktieanalytikers arbetsmetodik, deras påverkan på aktiemarknaden samt deras upplevda yrkesproblematik. För att åskådliggöra detta har vi genomfört tio djupintervjuer med aktörer från dagens finansbransch. Fem analytiker från de större analyshusen samt fem experter från diverse relaterade finansområden har intervjuats. Målsättningen är att granska analytiker utifrån dessa tio respondenters olika perspektiv och därmed tydliggöra analytikers roll i det finansiella maskineriet. Detta uppnås genom att fokusera på tre delområden: Hur analytiker faktiskt praktiserar sitt yrke och vad för vetenskaplig förankring de har (1), vad de har för påverkan på aktiemarknaden (2) samt vilka svårigheter de upplever att yrket möter i dagsläget och en nära framtid (3). Studien påvisar att variablerna bakom aktievärderingarna är viktigare än värderingsverktyget i sig. Analytikers verktyg för analys är därför bristande vilket har sitt ursprung i företagsekonomins ofullständiga finansiella teorier. De aktörerna med störst påverkan på marknaden är de professionella och institutionella placerarna. Det framgår även att analytiker inte har någon större påverkan på marknaden, vilket var studiens utgångpunkt. Småsparare bör vara medvetna om dessa fakta och inte blint följa riktkurser eller rekommendationer. Slutligen kan studien påvisa att analytiker inte befinner sig i en helt oberoende ställning gentemot arbetsgivare, kunder och bolagen de analyserar. Att konstant värna om dessa relationer leder till direkta och indirekta agentkostnader som slutligen drabbar kunderna och analyshuset. / This paper examines analysts' methodology, their impact on the stock market and their perceived professional problems. To illustrate this, we have conducted ten interviews with profiles from today's financial industry. Five analysts from larger investment banks and five experts from various related financial areas were interviewed. The goal is to examine analysts from these ten respondents' perspectives and thereby clarify the analyst’s role in the financial machinery. This is achieved by focusing on three areas: How analysts actually practice their profession and what scientific basis they have (1), what their impact on the stock market is (2) and the difficulties they believe that the profession is facing today and in the near future (3). The paper shows that the variables behind set value of the stock are more important than the tools of how to set the value itself. The analysts’ tools for analyzing are therefore lacking which can be derived from the fact that the financial theories within the community of business administration often are incomplete. The profiles with the greatest impact on the market are the professional and institutional investors. Furthermore, the paper shows that analysts do not have a major influence on the market, which was the study's starting point. Small investors should be aware of these facts and not blindly follow target prices or recommendations. Finally, the study shows how analysts do not have an unbiased relationship towards their employers, clients or the companies they analyze. Constantly trying to preserve these relations leads to direct and indirect agency costs that ultimately affect the clients and investment banks.