Analyzing Financial Analysts: What They Look for in Financial Reports and How They Determine Earnings' Quality
Analyzing Financial Analysts: What They Look for in Financial Reports and How They Determine Earnings' Quality
Carol M Graham, Mark V Cannice, Todd L Sayre. Journal of Management Research. New Delhi: Aug 2002. Vol. 2, Iss. 2; pg. 63, 10 pgs
Abstract (Summary)
The impact that financial analysts have on the share prices of publicly held companies has come under increasing scrutiny. However, despite the role they play in the financial markets, surprisingly little is known about the way in which analysts evaluate companies', report financial information or how they assess the quality of companies' earnings. We surveyed 34 financial analysts across 18 industries to address two issues in tandem - their use of financial information and their determination of earnings' quality. We found that analysts rely primarily on adjusted earnings figures, line of business data, reported cash flows, and the use of accounting conservatism in evaluating companies. Further, analysts regarded earnings growth, corporate growth prospects, risk, and recurring earnings as the primary determinants of quality for a company's earnings. Given these findings, it seems prudent for managers to focus corporate strategy on improving the results that are most closely inspected - i.e. earnings growth, growth prospects, reduction of financial and operating risk, and the persistence of earnings. [PUBLICATION ABSTRACT]
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Full Text (4344 words)
Copyright South Asia Publications Aug 2002
[Headnote]
Abstract
The impact that financial analysts have on the share prices of publicly held companies has come under increasing scrutiny. However, despite the role they play in the financial markets, surprisingly little is known about the way in which analysts evaluate companies', report financial information or how they assess the quality of companies' earnings. We surveyed 34 financial analysts across 18 industries to address two issues in tandem - their use of financial
Carol M Graham, Mark V Cannice, Todd L Sayre. Journal of Management Research. New Delhi: Aug 2002. Vol. 2, Iss. 2; pg. 63, 10 pgs
Abstract (Summary)
The impact that financial analysts have on the share prices of publicly held companies has come under increasing scrutiny. However, despite the role they play in the financial markets, surprisingly little is known about the way in which analysts evaluate companies', report financial information or how they assess the quality of companies' earnings. We surveyed 34 financial analysts across 18 industries to address two issues in tandem - their use of financial information and their determination of earnings' quality. We found that analysts rely primarily on adjusted earnings figures, line of business data, reported cash flows, and the use of accounting conservatism in evaluating companies. Further, analysts regarded earnings growth, corporate growth prospects, risk, and recurring earnings as the primary determinants of quality for a company's earnings. Given these findings, it seems prudent for managers to focus corporate strategy on improving the results that are most closely inspected - i.e. earnings growth, growth prospects, reduction of financial and operating risk, and the persistence of earnings. [PUBLICATION ABSTRACT]
» Jump to indexing (document details)
Full Text (4344 words)
Copyright South Asia Publications Aug 2002
[Headnote]
Abstract
The impact that financial analysts have on the share prices of publicly held companies has come under increasing scrutiny. However, despite the role they play in the financial markets, surprisingly little is known about the way in which analysts evaluate companies', report financial information or how they assess the quality of companies' earnings. We surveyed 34 financial analysts across 18 industries to address two issues in tandem - their use of financial
References: Publication title: Journal of Management Research. New Delhi: Aug 2002. Vol. 2, Iss. 2; pg. 63, 10 pgs Source type: Periodical ISSN: 09725814 ProQuest document ID: 1967144971 Text Word Count 4344 Document URL: http://proquest.umi.com.ezproxy.saintleo.edu/pqdweb?did=1967144971&sid=2&Fmt=3&clientId=18088&RQT=309&VName=PQD