Abstract
This study demonstrates that in using security forecasts for equity valuation, it would be preferable to take into consideration of analyst multi-year forecasts instead of exclusively employing current-year earnings forecast because the latter forecast measure most typically incorporates non-recurring and/or value-irrelevant components of accounting earnings. In contrast, the same analyst's concurrent long-term earnings estimates appear to be free from the influence of the non-recurring earnings items. Namely, when a firm's long-run profitability differs from current year earnings, long-horizoned analyst forecasts add to identify the differences.
Original language | English |
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Pages (from-to) | 714-723 |
Number of pages | 10 |
Journal | International Review of Finance |
Volume | 21 |
Issue number | 2 |
DOIs | |
State | Published - Jun 2021 |
Keywords
- analysts
- discretionary accruals
- earnings forecasts
- non-recurring earnings