[en] This paper investigates the effect of accounting conservatism on the consistency of analysts’ forecasts. Existing studies do not address the question of whether accounting conservatism generates useful outcomes for market participants other than debtholders. Using a large sample of French firms from 2001-2016, we show that enhances in accounting conservatism yield more accurate and less dispersed earnings forecasts. Furthermore, our study provides evidence of a negative link between accounting conservatism and volatility in forecast revisions. Indeed, our findings are significantly robust to alternative measures of the dependent variable. Overall, our analysis documents strongly support the view that conservatism is consistently useful for financial analyst forecasts. Our empirical findings have practical implications for market participants who are sensitive to the quality of corporate disclosure and the mitigation of information asymmetry.
Disciplines :
Accounting & auditing
Author, co-author :
Boussaid, Nabila ; Université de Liège - ULiège > HEC Liège : UER > Gestion financière et consolidation
Sougné, Danielle ; Université de Liège - ULiège > HEC Liège : UER > Gestion financière et consolidation
Language :
English
Title :
Conditional Conservatism and Analyst Forecast Consistency
Publication date :
22 May 2018
Number of pages :
23
Event name :
35th Annual Conference of the French Finance Association (AFFI)
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