Exploring and Extending Analyst Muiti-Year Earnings Forecast, Analyst Performance Ranking, and Csr Ranking Studies(1/2)

Project Details


The first year project focuses on firm investment adequacy from the perspective of security analysts. Perhaps due to both uncertainty of future prospect and accounting conservatism as well as inaccuracy, the carrying amount of firm investment assets may fail to reflect the intrinsic value. Accordingly, analyst reports may be indispensably informative for evaluating these assets. Aiming at potential inefficiency in the prior studies that identify investment inadequacy, this project establishes the model of over- or under-investment based on analyst earnings forecasts, investigating (1) would more analysts issue research reports, especially multi-year earnings forecasts, at earnings announcement date for the firms with greater long-termed investment in proportion of total assets? (2) would analysts more quickly provide research reports at the earnings announcements date for these firms? (3) Does my investment adequacy measure estimated from analyst perspective outperform the settings of Richardson (2006) and McNichols and Stubben (2008)? (4) Do and to what extent firm agency conflicts between shareholders and debtholders and that between shareholders and managers explain over- or under-investment? The second year project examines the signaling effect of corporate social responsibility (CSR) achievements, which Shiu and Yang (2017) described as having insurance-like effects for future year payback at negative events, at cash dividend or share repurchase announcements. I hypothesize that the firm may expand CSR assets when it has temporary financial surplus. Therefore, an examination of the relationship between CSR efforts and share repurchases as well as cash dividends helps us understand how effectively CSR ranking reflects company financial and/or operational status. Accordingly, I will examine (1) whether CSR ranking helps convey the signal regarding financial status and/or concurrent profits, (2) whether the analyst would issue favorable forecasts for firms with superior CSR achievements but reduced dividends and no share repurchases, (3) whether the firm CSR ranking increases with the temporary component of earnings, and (4) whether near- and long-termed analyst earnings forecasts reflect the effectiveness of CSR achievements.The third year project examines the market-timing ability of All-American analysts. The extant studies of the key factors for All-American analyst elections focus on the relative importance of forecast ability versus popularity. These studies, moreover, prevalently adopt forecast accuracy as the proxy variable for analyst security selection ability. The voters for All-American analysts, however, are the well diversified institutional investors, who fairly likely feel indifferent if a sell-side analyst neglects certain stocks. Their primary concerns may be the systematic risk of their portfolios and thus their key factors may include analyst market timing ability. Accordingly, I examine (1) whether the All-American analysts elected by Institutional Investor and/or the Wall Street Journal outperform the other analysts in predicting overall market returns? (2) Do Institutional Investor and/or the Wall Street Journal weigh more on the market timing ability when they elect All-American analysts for firms in the industries with greater systematic risk? (3) Do analysts tend to avoid covering the firms with high earnings volatility for fear of their jeopardizing forecast accuracy, thereby reducing the probability of being elected as All-American stars?
Effective start/end date1/08/1931/07/20

UN Sustainable Development Goals

In 2015, UN member states agreed to 17 global Sustainable Development Goals (SDGs) to end poverty, protect the planet and ensure prosperity for all. This project contributes towards the following SDG(s):

  • SDG 4 - Quality Education
  • SDG 12 - Responsible Consumption and Production
  • SDG 17 - Partnerships for the Goals


  • over-investment
  • corporate social responsibility
  • signaling
  • all-star analysts
  • market timing ability


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