The future is uncertain. We therefore make predictions and forecasts of the future in order to be able to plan and react to future events. For this purpose, financial analysts are argued to have a responsibility towards investors and the market, in helping to keep the market efficient. Given that financial analysts act in a rational way we argue that analysts should strive to maximize forecast accuracy. The purpose of this study is to investigate how accurate financial analysts’ forecasts of Swedish firms’ future values are, and what information that analysts use that significantly affect the analysts’ forecast accuracy. To investigate this we first examine whether financial analysts contribute with value to investors by comparing their forecast precision against a simple time-series model. Our findings show that financial analysts produce significantly more accurate forecasts than a time-series model in the short term. Furthermore, given that rational analysts act in their own best interest while making accurate forecasts, we argue that analysts will incorporate and use the information that is available to them for the purpose of maximizing forecast accuracy. We investigate this by testing if the analysts’ forecast accuracy is affected by; the forecast horizon, the number of analysts following a firm, the firm size, the corporate visibility, the predictability of earnings, and trading volume. We find that the forecast accuracy is better when the amount of analysts following a firm is high, the firm size is larger, the forecasted company’s corporate visibility in the news is more frequent, and the predictability of earnings is higher. The trading volume does not have a significant effect on analysts’ forecast accuracy. To conclude, we question the value of financial analysts’ forecasts for longer forecast horizons.

Analistas do mercado financeiro (conhecidos como sell-side analysts, mas aqui designados apenas como analistas) são importantes intermediários da informação contábil/financeira. Seus relatórios são amplamente disponíveis e utilizados por investidores institucionais e não profissionais. É sabido que os analistas possuem conflitos de interesse e sofrem pressões quando processam as informações financeiras e escrevem seus relatórios de recomendações. Como consequência, analistas costumam escrever relatórios extensos e com um tom e recomendação muito otimistas. Assim, existe uma extensa literatura que examina o detalhe e o tom nos relatórios dos analistas. É sabido também que, em face a esse cenário, o investidor \"ajusta\" a recomendação do analista e utilizado de outros dados, além do relatório do analista, para tomar a decisão de investir, como o tamanho da empresa. Porém, um campo pouco explorado diz respeito às heurísticas e vieses que o analista está propenso a ter. Assim, pouco se sabe em que extensão tais atributos cognitivos influenciam o processo de escrita do analista, bem como a reação do mercado acionário. Por conta dessa incerteza, acadêmicos usualmente atribuem o processo de escrita do analista como sendo uma \"caixa-preta\" (BARKER, 1999b; BROWN, CALL, et al., 2015) e o uso do tamanho da empresa como fator de decisão de investimento como firm size effect (SHEFRIN, 2002). O objetivo principal desta tese é entender se as heurísticas e vieses influenciam o processo de escrita do analista. Também procura aqui determinar se esses mesmos atributos, inseridos nos relatórios dos analistas, funcionam como um gatilho, fazendo o investidor negociar. Como objetivo secundário, espera-se verificar se o efeito tamanho da empresa contribui na decisão do investidor negociar ações dentro de uma janela curta de 3 dias (D-1, D 0, D+1). Logo, esta tese visa contribuir para a rica literatura que trata sobre o papel dos analistas no mercado acionário, no entanto, também espera-se dar um passo adiante ao analisar o papel das heurísticas e vieses na escrita do analista. Como expectativa final, espera-se incentivar novas pesquisas que envolvam processos de julgamento dos analistas e das finanças comportamentais. Para tanto, esta tese procura responder a seguinte questão: Qual é o grau de influência das heurísticas e vieses no detalhe e no tom do relatório do analista e como o mercado acionário reage a tais atributos qualitativos? Esta tese espera também atender ao chamado de Schipper (1991) e Brown (1993) no que diz respeito a mais pesquisas que explorem os atributos qualitativos do relatório do analista. A metodologia que será aplicada aqui será o mixed-methods, em que serão coletados dados qualitativos dos relatórios dos analista e interpretados com análises quantitativas. A análise qualitativa envolverá análise de discurso com o uso de dicionários de termos amplamente utilizados na academia. A análise quantitativa envolverá, além de regressões simples e multivariadas, a aplicação da correlação canônica para analisar como as variáveis qualitativas interagem entre si. A base de dados a ser utilizada será os relatórios completos dos analistas que foram classificados como \"melhores\" analistas pela revista Institutional Investor Magazine por 3 anos consecutivos. Para alcançar esses objetivos, foram coletados 4.593 relatórios completos e analisados mais de 47 mil páginas de relatórios publicados entre os anos de 2012 a 2016. Como achados, descobriu-se que as heurísticas e vieses exercem uma influência positiva (na ordem de grandeza de 64,8%) na forma como o analista escreve, especialmente no que diz respeito ao detalhe. Também notou-se que tais relatórios explicam parte da negociação das ações no período, medida pelo volume negociado numa janela de 3 dias da data de publicação do relatório (D-1, D 0, D+1). Como achado final, foi demonstrado que tais atributos qualitativos isolados funcionam como um gatilho, fazendo o investidor negociar. Quando incluído o tamanho da empresa na análise notou-se um ponto interessante, essa variável, em conjunto com os achados das heurísticas e vieses, demonstra que o investidor não negocia rapidamente. / Financial market analysts (known as sell-side analysts, but here designated only as analysts) are important intermediaries of accounting / financial information. Its reports are widely available and used by institutional and non-professional investors. Analysts are known to have conflicts of interest and are pressured when they process financial information and write their recommendations reports. As a consequence, analysts often write lengthy reports with a very optimistic tone and recommendation. Thus, there is extensive literature that examines detail and tone in analysts\' reports. It is also known that, in the face of this scenario, the investor \"adjusts\" the analyst\'s recommendation and used other data, in addition to the analyst\'s report, to make the decision to invest, such as the size of the company. However, an unexplored field concerns the heuristics and biases the analyst is likely to have. Thus, little is known to what extent such cognitive attributes influence the analyst\'s writing process as well as the stock market reaction. Because of this uncertainty, scholars usually attribute the analyst\'s writing process as a \"black box\" (Barker, 1999b; Brown, Call, et al., 2015) and the use of firm size as an investment decision factor as firm size effect (SHEFRIN, 2002). The main objective of this thesis is to understand if the heuristics and biases influence the writing process of the analyst. It also seeks to determine if these same attributes, inserted in analysts\' reports, act as a trigger, causing the investor to negotiate. As a secondary objective, it is expected to verify whether the size effect of the firm contributes to the investor\'s decision to trade stocks within a 3-day window (D-1, D 0, D + 1). Therefore, this thesis aims to contribute to the rich literature that deals with the role of analysts in the stock market, however, it is also expected to take a step forward by analysing the role of heuristics and bias in analyst writing. As a final expectation, it is hoped to encourage further research that involves judgments of analysts and behavioural finance. To that end, this thesis tries to answer the following question: What is the degree of influence of heuristics and biases on the detail and tone of the analyst\'s report and how does the stock market respond to such qualitative attributes? This thesis also hopes to meet the call of Schipper (1991) and Brown (1993) for more research exploring the qualitative attributes of the analyst\'s report. The methodology that will be applied here will be the mixed-methods, in which qualitative data will be collected from the analyst reports and interpreted with quantitative analyses. Qualitative analysis will involve discourse analysis with the use of term dictionaries widely used in academia. The quantitative analysis will involve, besides simple and multivariate regressions, the application of canonical correlation to analyse how the qualitative variables interact with each other. The database to be used will be the full analyst reports that have been ranked \"best\" analysts by Institutional Investor Magazine for 3 consecutive years. To achieve these objectives, 4,593 complete reports were collected, and almost 48,000 pages of reports published between the years 2012 to 2016 were collected. As a result, heuristics and biases were found to exert a positive influence (in the order of magnitude of 64,8%) in the way the analyst writes, especially with regard to detail. It was also noted that such reports explain part of the trading of the shares in the period, measured by the volume traded in a 3 days window from the date of publication of the report (D-1, D 0, D + 1). As a final finding, it has been demonstrated that such isolated qualitative attributes act as a trigger, causing the investor to negotiate. When we included the size of the company in the analysis we noticed an interesting point, this variable, together with the heuristic and bias findings, demonstrated that investors do not trade quickly, they prefer to wait before to start trading.

Many top market capitalization companies are information technology (IT) firms, including Apple, Google, Microsoft, and Facebook, each of which is valued at more than $300 billion. Facebook is less than 10 years old and is one of the top 10 companies in the world in terms of market capitalization. However, technologies change rapidly; website revenue—which once grew at a brisk rate—has slowed down, while mobile technology growth is increasing and technology trends are shifting toward cloud hosting and big data analytics. IT companies that have increased their R&D spending remain leaders throughout periods of technology change. Companies such as Facebook and Google have doubled and tripled their profits, respectively over` the past decade. In this dynamic environment, analysts play a critical role in evaluating IT company financial statements and estimating company sales and earnings per share (EPS). This study examines how changes in R&D spending are related to analysts’ sales and earnings estimate revisions. An analysis of data over a 20-year period shows that analysts typically revise their sales estimates based on changes in a company’s R&D expenditures. The correlation between analyst earnings estimates and R&D expenditures, however, varies based on company size and industry within the IT sector. Analysts play a particularly important role in small companies, where the correlation between R&D and sales changes is not as high as in large companies. Analysts are thus critical to the functioning of capital markets in the IT sector.

This study will furnish the reader with general and specific investment advice as taken from questionnaires sent to a group of men who specialize in giving investment and financial advice -- financial analysts.

Um grande desafio das companhias hoje é como comunicar, em um formato conciso, informações valiosas de investimentos a todos os seus potenciais usuários, por meio de canais de comunicação ou plataformas. Isso porque, nos últimos anos, os relatórios corporativos têm sofrido constantes mudanças. Ademais, questiona-se se o Relato Integrado apresenta condições de atender a essa demanda. Ainda, trata-se de uma ideia recente, com vistas a melhorar a qualidade das informações divulgadas pelas empresas e trazer ao mercado uma visão de longo prazo quanto à sustentabilidade das empresas. Assim, neste trabalho, propôs-se a analisar, à luz da teoria da Sinalização, o impacto da divulgação do Relato Integrado na acurácia dos analistas de mercado, os quais são os principais responsáveis por munir os investidores com informações relevantes à sua tomada de decisão. Para tal, utilizou-se uma amostra de 80 empresas: 40 que divulgam o Relato Integrado e 40 semelhantes em tamanho, setor de atuação e país, mas que não publicam referido relato. O período analisado compreendeu três anos antes da adoção (2008, 2009 e 2010) e três anos depois (2012, 2013 e 2014). Para obter os dados, utilizou-se a base de dados da Thomson ONE Analytics®. O teste se baseou no modelo de efeitos fixos com dummies temporais, que se mostrou mais adequado, conforme proposta e disposição dos dados. Pelos resultados obtidos com o teste, identificouse que o Relato Integrado tem impacto estatisticamente significante na acurácia consensual do analista de mercado, mas de forma negativa. Embora isso ateste os resultados de estudos anteriores referentes a informações de cunho não financeiro - de que o analista de mercado não está interessado em tais informações - ao observar as dummies temporais, os resultados apontam uma melhora do aprendizado do analista de mercado, pelo aumento de sua acurácia, após a divulgação. Ao demonstrar significância estatística, após a adoção do relato, as dummies temporais revelam que, na amostra geral, houve melhora na previsibilidade do analista de mercado, apesar de ser maior nas empresas que não o divulgam. Desse modo, os resultados contribuem para aferir a relevância da divulgação do Relato Integrado. Ademais, demonstrar que, apesar das pesquisas anteriores concluírem que, isoladamente, a informação de cunho não financeiro pode não ser relevante ao analista de mercado. Isso porque, ao utilizar o pensamento integrado, pela divulgação do Relato Integrado, essa demonstrou relevância na curva de aprendizado, por meio da melhora da acurácia consensual do analista de mercado ao longo do tempo. / Nowadays, companies face the challenge to communicate valuable investment information to all their potential users, in a concise way, through communication channels or platforms. Moreover, there are doubts whether the Integrated Reporting had conditions to fulfill this demand or not. In addition, this is a recent idea, aiming to enhance the quality of information disclosed by companies, and bring their sustainability to the market in the long term. Therefore, in this work, we proposed to analyse the impact of the Integrated Reporting disclosure on the market analysts\' accuracy, responsible for providing the investors with crucial information for their decision taking, under the Signaling theory. For this, we used a sample of 80 companies: 40 that disclosure the Integrated Reporting, and 40 similar in size, acting department and country, but that do not disclosure such document. The studied period involved three years before the adoption (2008, 2009 and 2010), and three years after it (2012, 2013 and 2014). To obtain data, we used the Thomson ONE Analytics® database. The test was based on the fixed effects model with temporal dummies, the most adequate one according to data proposal and disposition. In accordance with the test results, we identified that the Integrated Reporting has a statistically significant impact on the consensual accuracy of the market analyst, but in a negative way. Although this certifies previous studies results concerning non-financial information - that is, the Market analyst is not interested in such information - when observing the temporal dummies, the results showed an enhancement in this analyst´s learning. Through the increase in his accuracy after disclosure. When demonstrating statistical significance after the adoption, the temporal dummies revealed that in the general sample there has been an improvement in the market analyst predictability, although higher than in companies that do not disclosure the document. Thus, the results contribute to attesting the relevance of the disclosure of the Integrated Reporting. Furthermore, demonstrates that, despite previous studies showing that in isolation, nonfinancial information may not be relevant to the market analyst. This happens because using integrated thinking through the disclosure of the Integrated Reporting has demonstrated relevance in the learning curve, by improving the consensus of the market analyst over time.

Um grande desafio das companhias hoje é como comunicar, em um formato conciso, informações valiosas de investimentos a todos os seus potenciais usuários, por meio de canais de comunicação ou plataformas. Isso porque, nos últimos anos, os relatórios corporativos têm sofrido constantes mudanças. Ademais, questiona-se se o Relato Integrado apresenta condições de atender a essa demanda. Ainda, trata-se de uma ideia recente, com vistas a melhorar a qualidade das informações divulgadas pelas empresas e trazer ao mercado uma visão de longo prazo quanto à sustentabilidade das empresas. Assim, neste trabalho, propôs-se a analisar, à luz da teoria da Sinalização, o impacto da divulgação do Relato Integrado na acurácia dos analistas de mercado, os quais são os principais responsáveis por munir os investidores com informações relevantes à sua tomada de decisão. Para tal, utilizou-se uma amostra de 80 empresas: 40 que divulgam o Relato Integrado e 40 semelhantes em tamanho, setor de atuação e país, mas que não publicam referido relato. O período analisado compreendeu três anos antes da adoção (2008, 2009 e 2010) e três anos depois (2012, 2013 e 2014). Para obter os dados, utilizou-se a base de dados da Thomson ONE Analytics®. O teste se baseou no modelo de efeitos fixos com dummies temporais, que se mostrou mais adequado, conforme proposta e disposição dos dados. Pelos resultados obtidos com o teste, identificouse que o Relato Integrado tem impacto estatisticamente significante na acurácia consensual do analista de mercado, mas de forma negativa. Embora isso ateste os resultados de estudos anteriores referentes a informações de cunho não financeiro - de que o analista de mercado não está interessado em tais informações - ao observar as dummies temporais, os resultados apontam uma melhora do aprendizado do analista de mercado, pelo aumento de sua acurácia, após a divulgação. Ao demonstrar significância estatística, após a adoção do relato, as dummies temporais revelam que, na amostra geral, houve melhora na previsibilidade do analista de mercado, apesar de ser maior nas empresas que não o divulgam. Desse modo, os resultados contribuem para aferir a relevância da divulgação do Relato Integrado. Ademais, demonstrar que, apesar das pesquisas anteriores concluírem que, isoladamente, a informação de cunho não financeiro pode não ser relevante ao analista de mercado. Isso porque, ao utilizar o pensamento integrado, pela divulgação do Relato Integrado, essa demonstrou relevância na curva de aprendizado, por meio da melhora da acurácia consensual do analista de mercado ao longo do tempo. / Nowadays, companies face the challenge to communicate valuable investment information to all their potential users, in a concise way, through communication channels or platforms. Moreover, there are doubts whether the Integrated Reporting had conditions to fulfill this demand or not. In addition, this is a recent idea, aiming to enhance the quality of information disclosed by companies, and bring their sustainability to the market in the long term. Therefore, in this work, we proposed to analyse the impact of the Integrated Reporting disclosure on the market analysts\' accuracy, responsible for providing the investors with crucial information for their decision taking, under the Signaling theory. For this, we used a sample of 80 companies: 40 that disclosure the Integrated Reporting, and 40 similar in size, acting department and country, but that do not disclosure such document. The studied period involved three years before the adoption (2008, 2009 and 2010), and three years after it (2012, 2013 and 2014). To obtain data, we used the Thomson ONE Analytics® database. The test was based on the fixed effects model with temporal dummies, the most adequate one according to data proposal and disposition. In accordance with the test results, we identified that the Integrated Reporting has a statistically significant impact on the consensual accuracy of the market analyst, but in a negative way. Although this certifies previous studies results concerning non-financial information - that is, the Market analyst is not interested in such information - when observing the temporal dummies, the results showed an enhancement in this analyst´s learning. Through the increase in his accuracy after disclosure. When demonstrating statistical significance after the adoption, the temporal dummies revealed that in the general sample there has been an improvement in the market analyst predictability, although higher than in companies that do not disclosure the document. Thus, the results contribute to attesting the relevance of the disclosure of the Integrated Reporting. Furthermore, demonstrates that, despite previous studies showing that in isolation, nonfinancial information may not be relevant to the market analyst. This happens because using integrated thinking through the disclosure of the Integrated Reporting has demonstrated relevance in the learning curve, by improving the consensus of the market analyst over time.

This study investigates whether market learning explains the absence of the accrual anomaly in recent years by examining three conditions associated with the presence of the anomaly in prior research: (i) a differential relation between future earnings and cash flows versus accruals, (ii) incorrect weighting of cash flows and accruals by investors when predicting earnings, and (iii) association of earnings forecast errors with returns. All of these conditions are widely documented in the anomaly period. In the no-anomaly period, I continue to find a differential relation of cash flows and accruals with future earnings. However, investors appear to correctly weight accruals and cash flows in their earnings predictions implicit in beginning-of-year security prices, consistent with learning. This study also investigates whether improvements in analyst forecasts contribute to investor learning and the absence of the anomaly. The association between analyst optimism and accruals is weaker in the no-anomaly period, but is still statistically significant. Furthermore, the anomaly ended simultaneously for firms followed by analysts and for non-followed firms, suggesting that improvements in analyst forecasts alone cannot account for improved market efficiency with respect to accruals. The results suggest that the anomaly was similar for firms held by institutional investors and for firms with no institutional holdings before the discovery of the anomaly while the anomaly ended sooner for held firms than for non-held firms after the discovery of the anomaly, consistent with the conjecture that arbitrage by institutional investors reduce the anomaly. Overall, the findings are consistent with market learning and suggest that improvement in investors' interpretation of accruals after the discovery of the anomaly explains the end of the anomaly. This improvement in investor learning is not due to changes in analysts' forecasting behavior, however.

I modern tid, andra världskriget och framåt, har finansanalytikerns roll vuxit markant och dess inverkan på börsen diskuteras numera flitigt. Forskning har bedrivits flitigt utomlands om hur dem arbetar inom yrket men materialet I Sverige är dessvärre väldigt tunt. Det finns en studie från 1992 av Lars Olbert där han kartlägger svenska finansanalytikers informationsanvändning och vilka värderingsmodeller som används i praktiken och inte bara i teorin. Denna kartläggning skulle vara intressant, och releveant, att uppdatera. Därav denna studie. Syftet med denna studie är att undersöka vilken information och värderingsmodeller som svenska finansanalytiker använder vid företagsvärdering 2011 samt att kartlägga om det finns skillnader i informationsanvändning mellan 1992 och 2011. Studien utgår ifrån en kvantitativ metod där empirin samlades in genom en webenkät. En pilot-intervju samt en pilot-enkät genomfördes innan den slutgilta enkäten skickades ut. Hypoteserna grundade sig i förändringar mot Olbert där även intressanta teoretiska samband testades av dessa förändringar. Studiens resultat visar att det skett förändringar i användandet av information och värderingsmodeller men vi finner även att visa modeller och viss information är oförändrad. Precis som tidigare är fundamental analys den vanligaste metod även 2011. Inom teknisk analys ser vi mindre förändringar medan i beta analysen ser vi en större förändring. Den enskilt största förändringen är en ökad användning av kassaflödesanalyser. P/E-talsvärdering däremot används marginellt mer idag än 1992. / In modern times, the Second World War and onwards, the role of the financial analysts has grown significantly and it’s influence and impact on the stock exchange is now widely discussed. Research has been conducted extensively abroad in their profession and how they work but the material in Sweden is very thin. There is a study by Lars Olbert from 1992 in hich he indentifies information use and the valuation models used in practice by swedish analysts and not just in theory. This study would be interesting, and relevant, to update. Hence this study. The purpose of the study is to examine the information and valuation models that Swedish financial analysts use 2011 and to identify whether there are differences in information usage between 1992 and 2011. The study is based on a quantitative method where empirical data were gathered through a web-based survey. An interview and a test-survey was issued before the actual survey was sent out. The hypothesis’ were based on the changes from Olbert and also interesting theoretical relationships were tested. Our results demonstrate that there are changes in the usage of information and valuation models, but we also find that the usage of some models and information is unchanged. As before, the fundamental analysis, is the most common valuation method in 2011. In technical analysis, we find minor changes while in beta analysis, we find a major change. The single biggest change is the increased use of cash flow. P/E-valuation is also used more today than in 1992.

Using a long panel on employment history, I exploit a novel setting to examine if sell-side analysts carry over their early career experience into their future professional careers. I find that analysts' early mentorship experience has a long-lasting impact on their professional styles. Analysts are more optimistic if they work with optimistic mentors in their first jobs as junior analysts: they issue more strong buy recommendations and upgrade jumps, and they are also more optimistic in earnings forecasts and price targets. While it is easy to pick up their mentors' styles, I show that it is apparently harder for them to learn their mentors' skills, as indicated by the lack of spillover in forecast accuracy. Only talented superstar mentors can unwind this pattern, passing their skills and reputation to their proteges. The market—especially sophisticated institutional investors—is smart in identifying the apprentices of optimistic mentors as short-run market reactions to their forecast revisions are weaker. Collectively, these results have important implications for financial economists and regulators (on a new source of optimism), for analyst profession (on talent management and portability), and for market participants (on information dissemination and optimism debias). / text

The objective of this dissertation is to provide insights on key actors who affect the link between marketing and firm value. The first essay examines financial analysts who provide earnings estimates about firms, thereby connecting firm and the stock market. The author uncovers whether and how financial analysts link market-based assets (e.g., brand equity) to a firm's cash flows, drivers of firm value. The author predicts market-based assets affect a firm's cash flow level, volatility, and acceleration through two marketing strategies, the ability to charge price premiums and penetrate new product markets. Hypotheses are tested using data from surveys of 220 North America based financial analysts. Based on analysts' feedback, brand and channel equity affect a firm's ability to penetrate new product markets, and brand equity also affects a firm's ability to charge price premiums. The ability to charge price premiums increases cash flows level while the ability to penetrate new product markets enhances cash flow level and acceleration of cash flows. Finally, channel equity directly lowers cash flow volatility and market intelligence enhances cash flow level. The findings offer evidence that analysts connect a firm's market-based assets to the generation of its cash flows. This has important implications for managers who maintain communications with the financial analyst community. In the second essay, the author examines the impact of a firm's shareholders and board of directors on the marketing-firm value link. The author hypothesizes that a firm's shareholders and board of directors affect how its advertising and R&D dollars are spent and also affect stock market participants' perceptions of this spending, thereby affecting its firm value. Hypotheses are tested using data on 575 publicly listed firms in the United States. The findings indicate that higher shareholder governance and higher marketing spending (both advertising and R&D spending) increase firm value. However, somewhat interestingly, higher board governance and higher advertising spending decrease firm value. These results highlight the importance of considering corporate governance when analyzing the marketing-shareholder value link and offer yet another important reason for the marketing function to have a voice in the firm's boardroom. / text