Investors’ demand for information on earnings arguably increases with a firm’s operating opacity, which analysts can unravel with sufficient effort, and the firm’s reporting opacity, which obscures the effects of economic events on reported earnings. We investigate analysts’ responses to opacity in the information discovery phase that precedes an earnings announcement and in the information analysis phase that begins with the earnings announcement. We find that analyst forecast activity increases with operating opacity in all phases of analyst activity. Forecast activity increases with reporting opacity in the information analysis phase, but the relation is negative or insignificant in the remaining phases. Return responses to forecast revisions increase with both types of opacity and are strongest in the information discovery phase. Our findings provide insights into how financial analysts respond to investors’ information demand and when investors most value analysts’ services.
| Speaker: | Dr Jennifer Wu Tucker Associate Professor, University of Florida |
| When: |
3.30 - 5.00pm |
| Venue: | School of Accountancy Level 3, Seminar Rm 3-2 |
| Contact: | Office of the Dean Email: SOAR@smu.edu.sg |