Abstract
AbstractThis study tests the information content of changes in analysts’ earnings forecasts. Using audit adjustment data from China, this study investigates whether changes in analysts’ cross‐year forecast revisions reflect audit information. The results show that the cross‐year revision of analysts’ earnings per share forecasts is positively related to the magnitude of audit adjustment, which may be mainly due to analysts’ communication with management. Furthermore, analysts who display higher forecast frequency, who issue their last forecast closer to the day the annual report is announced, or who show better forecast performance reflect a greater amount of audit information in their cross‐year forecast revisions.
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