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March 18, 2026The Accounting Review

Earnings Announcements and the Convergence (or Divergence) of Beliefs.

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Authors

DMDale MorseNew York State Department of HealthJSJens A. StephanEastern Michigan UniversityESEarl K. SliceRice University

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Overview

Examines how earnings announcements affect analysts' forecast dispersion, indicating unexpected investor beliefs dynamics.

Key Points

  • The study investigates how earnings announcements influence the dispersion of analysts' forecasts for future earnings.
  • Analyzed the effect of earnings announcements on one-year-ahead analysts' forecasts.
  • Utilized a Bayesian belief revision model to assess forecast responses to earnings announcements.
  • Partitioned sample based on the time between the announcement and analysts' forecasts to measure changes in dispersion.
  • Forecasts became more dispersed after earnings announcements than expected without an announcement.
  • Greater divergence in forecasts was linked to larger surprises in earnings announcements.
  • Disagreement in interpreting the impact of announcements contributed to increased diversity of beliefs.

Cite This Study

Morse et al. (1991) studied this question.

synapsesocial.com/papers/69ba423c4e9516ffd37a2576https://doi.org/10.2308/tar-9605070387
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Also Consider

Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1Building Better Measures of Analyst Disagreement Around Earnings: Implications for Disagreement, Trading Volume, and Returns2025
  2. 2Analysts' Forecasts, Earnings, Variability, and Option Pricing: Empirical Evidence.1988 · 1 citations
  3. 3Financial information and diverging beliefs2024 · 4 citations
  4. 4Associations Between Forecast Errors and Excess Returns Near to Earnings Announcements.1987
  5. 5Common Stock Returns Surrounding Earnings Forecast Revisions: More Puzzling Evidence.1991 · 3 citations