The timing of and incentives for annual earnings forecasts near interim earnings announcements

Abstract

Security analysts anticipate and respond to interim earnings announcements when they revise their annual earnings forecasts. Analysts avoid revising for two weeks before an interim announcement and more frequently revise immediately after an announcement. As expected, revision activity after an interim announcement is greater if absolute unexpected interim earnings are larger, if there are more competing analysts, and if unexpected interim earnings are negative. Unexpectedly, analysts are reluctant to revise their forecasts early in the fiscal year. These findings carry implications for research designs that use analyst forecasts.