The incremental informativeness of sell-side earnings forecasts. Evidence for the Warsaw Stock Exchange
The incremental informativeness of sell-side earnings forecasts. Evidence for the Warsaw Stock Exchange

Summary/Abstract: We investigate whether earnings forecasts issued by sell-side analysts are incrementally informative about the returns of firms listed on the Warsaw Stock Exchange (WSE), a moderately-developed, post-communist capital market. Our sample covers the fiscal years 2008-2016. The informativeness of earn-ings (and earnings forecasts) is defined as the association between earnings (earnings forecasts) and returns. Our findings indicate that the mean earnings forecasts issued by sell-side analysts are incremen-tally informative about firm returns beyond the earnings reported. This result does not depend on firm size, profitability, or market return. The findings indicate that such forecasts incorporate useful incremen-tal valuation information and that the incremental informativeness of these forecasts serves to protect the interests of analysts’ clients.

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