Do Analysts Understand the Economic and Reporting Complexities of Derivatives?

• Main Authors: CHANG, Hye Sun, Donohoe, Michael, Sougiannis, Theodore
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2016
• Subjects: Derivatives; Economic complexity; Reporting complexity; Hedging; Sell-side analysts; Earnings forecast; Accounting; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/soa_research/1507; https://ink.library.smu.edu.sg/context/soa_research/article/2534/viewcontent/DoAnalystsUnderstandEconReportComplexDeriv_2015_afv.pdf
• Institution: Singapore Management University

We investigate whether and how the complexity of derivatives influences analysts earnings forecast properties. Using a difference-in-differences design, we find that, relative to a matched control sample of non-users, analysts earnings forecasts for new derivatives users are less accurate and more d...