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

14 citations0/0 files storedJournal of Management and Research

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Auditing, Earnings Management, Governance Financial Analysis and Corporate Governance Financial Reporting and XBRL

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 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.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Imported from OpenAlex (CC0) — nothing here is generated.