The Disparity between Long-Term and Short-Term Forecasted Earnings Growth

We find the disparity between long-term and short-term analyst forecasted earnings growth is a robust predictor of future returns and revisions in long-term forecasted earnings growth. After adjusting for industry characteristics, stocks whose long-term earnings growth forecasts are far above or far...

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Main Author: WARACHKA, Mitchell Craig
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2010
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Online Access:https://ink.library.smu.edu.sg/lkcsb_research/1895
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1336821
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spelling sg-smu-ink.lkcsb_research-28942010-09-23T06:24:04Z The Disparity between Long-Term and Short-Term Forecasted Earnings Growth WARACHKA, Mitchell Craig We find the disparity between long-term and short-term analyst forecasted earnings growth is a robust predictor of future returns and revisions in long-term forecasted earnings growth. After adjusting for industry characteristics, stocks whose long-term earnings growth forecasts are far above or far below their implied short-term forecasts for earnings growth have negative and positive subsequent risk-adjusted returns, respectively. Despite the importance of conditioning on short-term forecasted earnings growth, these returns are not driven by earnings momentum. Instead, consistent with investors having limited attention, predictable revisions in long-term analyst forecasts appear to induce return predictability. 2010-01-01T08:00:00Z text https://ink.library.smu.edu.sg/lkcsb_research/1895 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1336821 Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University Finance and Financial Management Portfolio and Security Analysis
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Finance and Financial Management
Portfolio and Security Analysis
spellingShingle Finance and Financial Management
Portfolio and Security Analysis
WARACHKA, Mitchell Craig
The Disparity between Long-Term and Short-Term Forecasted Earnings Growth
description We find the disparity between long-term and short-term analyst forecasted earnings growth is a robust predictor of future returns and revisions in long-term forecasted earnings growth. After adjusting for industry characteristics, stocks whose long-term earnings growth forecasts are far above or far below their implied short-term forecasts for earnings growth have negative and positive subsequent risk-adjusted returns, respectively. Despite the importance of conditioning on short-term forecasted earnings growth, these returns are not driven by earnings momentum. Instead, consistent with investors having limited attention, predictable revisions in long-term analyst forecasts appear to induce return predictability.
format text
author WARACHKA, Mitchell Craig
author_facet WARACHKA, Mitchell Craig
author_sort WARACHKA, Mitchell Craig
title The Disparity between Long-Term and Short-Term Forecasted Earnings Growth
title_short The Disparity between Long-Term and Short-Term Forecasted Earnings Growth
title_full The Disparity between Long-Term and Short-Term Forecasted Earnings Growth
title_fullStr The Disparity between Long-Term and Short-Term Forecasted Earnings Growth
title_full_unstemmed The Disparity between Long-Term and Short-Term Forecasted Earnings Growth
title_sort disparity between long-term and short-term forecasted earnings growth
publisher Institutional Knowledge at Singapore Management University
publishDate 2010
url https://ink.library.smu.edu.sg/lkcsb_research/1895
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1336821
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