This study examines the role of expectations management in explaining why firms with high dispersion in analyst forecasts experience relatively low future stock returns. We first demonstrate that the negative relation between dispersion and returns is concentrated around earnings announcements...

This study presents evidence suggesting that investors do not fully unravel predictable pessimism in sell-side analysts' earnings forecasts. We show that measures of prior consensus and individual analyst forecast pessimism are predictive of both the sign of firms' earnings surprises and the...

The relation between aggregate earnings and aggregate returns is complex and not fully understood. For example, in contrast to firm-level relations, prior literature finds aggregate earnings changes and aggregate stock returns are negatively related. This paper constructs new measures of...

An important determinant of belief polarization is the different interpretations of the same information. We examine whether discourse uncertainty in corporate disclosures, an important driver of differential interpretations, leads to polarization in financial markets. Using a novel measure of...

Over the past 12 years, financial analysts across the world have been optimistically wrong with their 12-month earnings forecasts by 25.3%. This study may be the first of its kind to assess analyst earnings forecast accuracy at all listed companies across the globe, covering 70 countries. A...

Standard models of Bayesian updating predict a stronger investor reaction to new information when those investors are more uncertain about the firm. However, prior empirical literature has struggled to find widespread evidence in support of this prediction. This paper tests two explanations for...

This paper examines how the characteristics of accounting systems and management incentives interact and collectively determine financial reporting quality. We develop a rational expectations equilibrium model that features a steady-state firm with investments, financial and non-financial...

The accounting literature has used the midpoint of range forecasts in various research settings, assuming that the midpoint is the best proxy for managers' earnings expectations revealed in range forecasts. We argue that given managers' asymmetric loss functions regarding earnings surprises,...

This study aims to empirically clarify the informational role of interactive discussions with corporate insiders by analyzing how participants’ expectations are affected by their participant comments during analyst and investor days. The results indicate that the tone of management...