Title Reporting Bias and Analyst Forecast
Prof. Nanqin LIU
Associate Professor in Accounting
FBA, UM
Date: 14 April 2025 (Monday)
Time: 13:00-14:00
Venue: FBA Lobby
Abstract
This paper investigates how managers’ and analysts’ shared and conflicting incentives interact to affect firms’ financial reports and analysts’ forecasts, these reports’ association with market prices, and their information content. In our model, the analyst strives to forecast accurately while generating trading profits for their client; the manager aims to meet the analyst’s forecast while seeking favorable stock price responses to their financial reports. We show that the manager’s incentive to meet the analyst’s forecast, when combined with the analyst’s incentive to forecast accurately, leads to greater forecast accuracy and a greater response coefficient to the firm’s report in price despite the report having lower information content. Higher quality information possessed by the analyst can result in lower forecast accuracy and less total information being conveyed to the market by the forecast and the financial report.
Speaker
Prof. LIU holds a PhD in Accounting from the University of Hong Kong, a MPhil in Operations Management from the Lingnan University, and a BBA in Accounting from Sun Yat-sen University. Her research interests include Accounting Theory, Auditing, Financial Reporting, and Interface between Operations Management and Accounting. Prof. LIU published papers in leading accounting journals, including The Accounting Review and Contemporary Accounting Research.
All are welcome!
