Universität zu Köln

Lorenz, Tanja and Homburg, Carsten (2018). Determinants of analysts' revenue forecast accuracy. Rev. Quant. Financ. Account., 51 (2). S. 389 - 432. NEW YORK: SPRINGER. ISSN 1573-7179

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Abstract

This study investigates financial analysts' revenue forecasts and identifies determinants of the forecasts' accuracy. We find that revenue forecast accuracy is determined by forecast and analyst characteristics similar to those of earnings forecast accuracy-namely, forecast horizon, days elapsed since the last forecast, analysts' forecasting experience, forecast frequency, forecast portfolio, reputation, earnings forecast issuance, forecast boldness, and analysts' prior performance in forecasting revenues and earnings. We develop a model that predicts the usefulness of revenue forecasts. Thereby, our study helps to ex ante identify more accurate revenue forecasts. Furthermore, we find that analysts concern themselves with their revenue forecasting performance. Analysts with poor revenue forecasting performance are more likely to stop forecasting revenues than analysts with better performance. Their decision is reasonable because revenue forecast accuracy affects analysts' career prospects in terms of being promoted or terminated. Our study helps investors and academic researchers to understand determinants of revenue forecasts. This understanding is also beneficial for evaluating earnings forecasts because revenue forecasts reveal whether changes in earnings forecasts are due to anticipated changes in revenues or expenses.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Lorenz, Tanja UNSPECIFIED UNSPECIFIED UNSPECIFIED Homburg, Carsten UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-179074
DOI:	10.1007/s11156-017-0675-4
Journal or Publication Title:	Rev. Quant. Financ. Account.
Volume:	51
Number:	2
Page Range:	S. 389 - 432
Date:	2018
Publisher:	SPRINGER
Place of Publication:	NEW YORK
ISSN:	1573-7179
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language CASH FLOW FORECASTS; MANAGEMENT EARNINGS FORECASTS; SECURITY ANALYSTS; UNDERWRITER REPUTATION; CAREER CONCERNS; PERFORMANCE; ABILITY; CREDIBILITY; EXPERIENCE; REVISIONS Multiple languages Business, Finance Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/17907