Do analysts understand the economic and reporting complexities of derivatives?

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• 作者：Hye Sun Chang^a ; ^{hschang@smu.edu.sg" class="auth_mail" title="E-mail the corresponding author} ; Michael Donohoe^b ; ^{mdonohoe@illinois.edu" class="auth_mail" title="E-mail the corresponding author} ; Theodore Sougiannis^b ; ^{sougiani@illinois.edu" class="auth_mail" title="E-mail the corresponding author}
• 关键词：G29 ; G32 ; M41
• 刊名：Journal of Accounting and Economics
• 出版年：2016
• 出版时间：April-May 2016
• 年：2016
• 卷：61
• 期：2-3
• 页码：584-604
• 全文大小：774 K

文摘

We investigate whether and how the complexity of derivatives influences analysts׳ earnings forecast properties. Using a difference-in-differences design, we find that, relative to a matched control sample of non-users, analysts׳ earnings forecasts for new derivatives users are less accurate and more dispersed after derivatives initiation. These results do not appear to be driven by the economic complexity of derivatives, but rather the financial reporting of such economic complexity. Overall, despite their financial expertise, analysts routinely misjudge the earnings implications of firms׳ derivatives activity. However, we find evidence that a series of derivatives accounting standards has helped analysts improve their forecasts over time.