분기손익조정효과와 이익예측오차 및 이익예측정확성

This study examines the relation between settling-up effect of quarterly earnings and bias and accuracy of analysts’ quarterly earnings forecast error. The settling-up effect of quarterly earnings is known as a non-contemporaneous recognition of a portion of earnings for a quarter in other quarters. This phenomenon might be caused by a fundamental feature of the accrual basis of accounting that allows various estimates and allocation on revenues and expenses. In this study, I focus on the settling-up effect of expenses that are associated with sales for different quarters. If financial analysts provide earnings forecasts without fully considering the settling-up effect of expenses between quarters, it is expected that quarterly earnings forecasts are more optimistically biased and less accurate. Empirical finding generally supports my expectation. The more settling-up effect of expenses, the more optimistic earnings forecast error, and the less accurate earnings forecasts. However, such a result is not observed for non-settling-up effect of expenses contemporaneously matched with sales in the same quarter. This result suggests financial analysts do not fully reflect the settling-up effect of quarterly earnings in forming their earnings forecasts. Thus, information users should be careful in using analysts’ forecasts for their investment decisions.