Do Analysts See through Misreporting? Evidence from SEC-Enforced Misreporting Cases

• 발행기관: People & Global Business Association
• 저자명: Sewon Kwon Jae Hwan Ahn Sun-Moon Jung
• 간행물 정보: 『Global Business and Finance Review』Vol.30 No.11, 46~63쪽, 전체 18쪽
• 주제분류: 경제경영 > 경영학
• 파일형태: PDF
• 발행일자: 2025.11.30

국문 초록

Purpose: This study examines the role of analysts as information intermediaries in detecting misreporting at the time it occurs, focusing on income-increasing misreporting cases identified by the Securities and Exchange Commission (SEC). Design/methodology/approach: Using a propensity-score matched sample and various econometric approaches, we analyze dynamic changes in analysts' earnings forecast bias for misreporting firms relative to non-misreporting counterfactuals with similar ex ante misreporting probabilities, particularly around the first year of misreporting. Findings: Our results indicate that analysts issue more conservative (i.e., less optimistic) earnings forecasts for misreporting firms than for non-misreporting counterfactuals. This suggests that analysts can discern manipulated earnings, supporting the rational forecasting view. Research limitations/implications: Despite our attempt to address potential endogeneity between corporate misreporting and analysts' earnings forecasts, causal inference remains subject to assumptions inherent in our econometric approaches. Nevertheless, the consistency and robustness of our findings across various methods reinforce the credibility of our conclusions. Our results suggest that analysts can identify misreporting early and issue preemptive warnings. Originality/value: This study provides novel evidence that analysts can discern overstated earnings at the time of misreporting. Its findings deepen our understanding of analysts' role as information intermediaries in financial markets.

목차

I. Introduction

II. Literature and Hypothesis Development

III. Research Design

IV. Results

V. Further analysis

VI. Conclusion

References

키워드

sell-side analysts earnings forecasts misreporting commission misreporting detection