This study investigates the behavior of sell-side analysts covering firms that are about to experience breaks in strings of consecutive quarterly earnings increases. I offer evidence that analysts downgrade their recommendations and break quarter earnings estimates right before announcement of the break. Analysts' forecast revisions are typically negative and recommendation downgrades are more likely to continue for at least three quarters following the break. Analysts are reluctant to lower their expectations for firms with longer strings, especially as the duration of the current string increases.Finally, I will check how the introduction of Regulation AC might affect analystsa#39; willingness to warn investors of upcoming breaks. There are ... Tech Group research analysts actively participated in soliciting investment-banking business.
|Title||:||Do Analysts Warn Investors about Future Earnings Decreases? Evidence from Their Forecast Revisions and Changes in Recommendations Before a Break in a String of Consecutive Earnings Increases|
|Author||:||Zhanel D. Mailibayeva|
|Publisher||:||ProQuest - 2007|