Document Type
Article
Publication Date
10-28-2010
Abstract
We find the disparity between long-term and short-term analyst forecasted earnings growth is a robust predictor of future returns and long-term analyst forecast errors. After adjusting for industry characteristics, stocks whose long-term earnings growth forecasts are far above or far below their implied short-term forecasts for earnings growth have negative and positive subsequent risk-adjusted returns along with downward and upward revisions in long-term forecasted earnings growth, respectively. Additional results indicate that investor inattention toward firm-level changes in long-term earnings growth is responsible for these risk-adjusted returns.
Recommended Citation
Da, Z., & Warachka, M. (2011). The disparity between long-term and short-term forecasted earnings growth. Journal of Financial Economics, 100(2), 424-442. https://doi.org/10.1016/j.jfineco.2010.10.015
Peer Reviewed
1
Copyright
Elsevier
Comments
This is an author-produced PDF of an article that later underwent peer review and was accepted for publication in Journal of Financial Economics, volume 100, issue 2, in 2011. The definitive publisher-authenticated version may differ from this one and is available online at https://doi.org/10.1016/j.jfineco.2010.10.015.