THE IMPACT OF A FIRM'S CONTRACTS AND SIZE ON THE ACCURACY, DISPERSION AND REVISIONS OF FINANCIAL ANALYSTS' FORECASTS: A THEORETICAL AND EMPIRICAL INVESTIGATION.

Persistent Link:
http://hdl.handle.net/10150/184093
Title:
THE IMPACT OF A FIRM'S CONTRACTS AND SIZE ON THE ACCURACY, DISPERSION AND REVISIONS OF FINANCIAL ANALYSTS' FORECASTS: A THEORETICAL AND EMPIRICAL INVESTIGATION.
Author:
PARKASH, MOHINDER.
Issue Date:
1987
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
The evidence presented in this study suggests that the dispersion, accuracy and transitory component in revisions of financial analysts' forecasts (FAF) are determined by production/investment/financing decisions, accounting choices as well as firm specific characteristics including the type of control, debt to equity ratio and size of the firm. Firms with managers control (owners control), high (low) debt to equity ratio and large (small) size are hypothesized to have higher (lower) dispersion, forecast error and transitory components in revisions of FAF. These hypotheses are motivated by the contracting cost and political visibility theories. The information availability theory is included as a contrast to the political visibility hypothesis. The information availability hypothesis predicts large (small) firms to have lower (higher) dispersion, forecast error and transitory component in revisions of FAF. The regression results are sensitive to deflated and undeflated measures of the dispersion and accuracy of FAF and size of the firm. The appropriateness of the two measures of firm's size, the book value of total assets and the market value of common stock plus long-term debt, as well as the deflated and undeflated measures of dispersion and accuracy of FAF are investigated. It is concluded that deflated measures of the dispersion and forecast errors and the market value as measure of firm size are misspecified in the present context. The current year forecast revisions are assumed to consist of the transitory and permanent components. The second year forecast revisions are used to represent the long-term forecast revisions and are used as a control for the permanent component of forecast revisions. The regression results are consistent with the contracting and political visibility hypotheses. The firm specific characteristics are hypothesized to influence forecast errors and dispersion directly and indirectly through business risk and accounting policy choices. The links between firm characteristics and business risk, accounting policy choices, dispersion and forecast errors are established and path analysis is used to test these relationships. These relationships are observed to be consistent with predictions and significant.
Type:
text; Dissertation-Reproduction (electronic)
Keywords:
Finance -- Forecasting.; Business forecasting.
Degree Name:
Ph.D.
Degree Level:
doctoral
Degree Program:
Business Administration; Graduate College
Degree Grantor:
University of Arizona

Full metadata record

DC FieldValue Language
dc.language.isoenen_US
dc.titleTHE IMPACT OF A FIRM'S CONTRACTS AND SIZE ON THE ACCURACY, DISPERSION AND REVISIONS OF FINANCIAL ANALYSTS' FORECASTS: A THEORETICAL AND EMPIRICAL INVESTIGATION.en_US
dc.creatorPARKASH, MOHINDER.en_US
dc.contributor.authorPARKASH, MOHINDER.en_US
dc.date.issued1987en_US
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractThe evidence presented in this study suggests that the dispersion, accuracy and transitory component in revisions of financial analysts' forecasts (FAF) are determined by production/investment/financing decisions, accounting choices as well as firm specific characteristics including the type of control, debt to equity ratio and size of the firm. Firms with managers control (owners control), high (low) debt to equity ratio and large (small) size are hypothesized to have higher (lower) dispersion, forecast error and transitory components in revisions of FAF. These hypotheses are motivated by the contracting cost and political visibility theories. The information availability theory is included as a contrast to the political visibility hypothesis. The information availability hypothesis predicts large (small) firms to have lower (higher) dispersion, forecast error and transitory component in revisions of FAF. The regression results are sensitive to deflated and undeflated measures of the dispersion and accuracy of FAF and size of the firm. The appropriateness of the two measures of firm's size, the book value of total assets and the market value of common stock plus long-term debt, as well as the deflated and undeflated measures of dispersion and accuracy of FAF are investigated. It is concluded that deflated measures of the dispersion and forecast errors and the market value as measure of firm size are misspecified in the present context. The current year forecast revisions are assumed to consist of the transitory and permanent components. The second year forecast revisions are used to represent the long-term forecast revisions and are used as a control for the permanent component of forecast revisions. The regression results are consistent with the contracting and political visibility hypotheses. The firm specific characteristics are hypothesized to influence forecast errors and dispersion directly and indirectly through business risk and accounting policy choices. The links between firm characteristics and business risk, accounting policy choices, dispersion and forecast errors are established and path analysis is used to test these relationships. These relationships are observed to be consistent with predictions and significant.en_US
dc.typetexten_US
dc.typeDissertation-Reproduction (electronic)en_US
dc.subjectFinance -- Forecasting.en_US
dc.subjectBusiness forecasting.en_US
thesis.degree.namePh.D.en_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineBusiness Administrationen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.identifier.proquest8712906en_US
dc.identifier.oclc698380125en_US
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