The Effect of Repeat Restructuring Charges on Analysts' Forecast Revisions and Accuracy
The primary objective of this study is to examine the effect of prior restructuring charges on analyst forecast revisions and accuracy. We find evidence that analysts respond differently to first-time restructuring firms than to repeat restructuring firms. Analysts revise their forecasts of both one-year-ahead earnings and five-year long-term growth in earnings more negatively for first-time restructuring firms than for firms with prior charges. When we examine forecast errors in the year subsequent to the restructuring, we find that current charges complicate analysts' earnings forecast task. We further find that the decline in analyst forecast accuracy is mitigated by prior charges within past two years.
MSU Digital Commons Citation
Lin, Beixin and Yang, Rong, "The Effect of Repeat Restructuring Charges on Analysts' Forecast Revisions and Accuracy" (2006). Department of Accounting and Finance Faculty Scholarship and Creative Works. 110.