The Walkdown to Beatable Analyst Forecasts: The Roles of Equity Issuance and Insider Trading Incentives

@inproceedings{Richardson2001TheWT,
  title={The Walkdown to Beatable Analyst Forecasts: The Roles of Equity Issuance and Insider Trading Incentives},
  author={Scott A. Richardson and Siew Hong Teoh and Peter D. Wysocki},
  year={2001}
}
Security regulators and the business press have alleged that firms play an 'earnings-guidance game' where analysts make optimistic forecasts at the start of the year and then 'walk down' their estimates to a level the firm can beat by the end of the year. In a comprehensive sample of I/B/E/S individual analysts' forecasts of annual earnings from 1983-1998, we find strong support for the claim in the post-1992 period. We examine whether the 'walk down' to beatable targets is associated with… CONTINUE READING

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