Does Quarterly Workday Variability Lead to Predictable Analyst Earn-ings Estimation Errors?

No Thumbnail Available
Files
bachelor_Jalonen_Juho_2023.pdf (1.12 MB)
Journal Title
Journal ISSN
Volume Title
School of Business | Bachelor's thesis
Electronic archive copy is available locally at the Harald Herlin Learning Centre. The staff of Aalto University has access to the electronic bachelor's theses by logging into Aaltodoc with their personal Aalto user ID. Read more about the availability of the bachelor's theses.
Date
2023
Major/Subject
Mcode
Degree programme
Rahoitus
Language
en
Pages
31 + 1
Series
Abstract
Time is an important factor in determining the level of value created by operations of companies. As public holidays close down most businesses, the variation in the amount of such dates within companies reporting periods should result in predictable variation in earnings and revenues. Such predictable variation poses an interesting frame for investi-gating analyst forecast efficiency – do analyst account for these predictable performance patterns in their forecasts? This thesis seeks to answer this question by regressing the quarterly performance and analyst forecast error measures on the change in workdays in the Italian, French, Span-ish and Japanese equity markets during 2000-2022. Results of this analysis show a posi-tive relationship between change in workdays and change in quarterly earnings. On average level, analysts seem to incorporated this to their models, as there is no asso-ciation between change in workdays and standard unexpected earnings. Sorting compa-nies based on relative strength of performance – workday relationship does reveal some evidence that for companies with the strongest relationship analyst tend to underesti-mate the full impact.
Description
Thesis advisor
Lof, Matthijs
Keywords
analyst forecasts, quarterly earnings, SUE, PEAD
Other note
Citation