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Full-Text Articles in Business
Differential Informativeness Of Accrual Measures To Analysts’ Forecast Accuracy, Kwadwo Asare, Lookman Buky Folami, Elena Precourt
Differential Informativeness Of Accrual Measures To Analysts’ Forecast Accuracy, Kwadwo Asare, Lookman Buky Folami, Elena Precourt
Accounting Department Faculty Journal Articles
This paper evaluates whether analysts incorporate formal measures of earnings quality into their earnings forecasts. It examines whether the accrual ratio and abnormal accruals, measured with the Modified Jones (1991) Model of discretionary accruals, differentially inform analysts’ earnings forecasts. It uses the accuracy of analysts’ forecast as a context in which to evaluate how well analysts incorporate effects of the information contained in accrual ratio and abnormal accruals. The results indicate that the accrual ratio is negatively related to the absolute value of analysts’ forecast errors while the Modified Jones (1991) Model of discretionary accruals have virtually no economic effect …