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The effect of consistency in book-tax differences on analysts’ earnings forecasts: Evidence from forecast accuracy and informativeness

Journal of Accounting and Public Policy, ISSN: 0278-4254, Vol: 39, Issue: 3, Page: 106740
2020
  • 10
    Citations
  • 0
    Usage
  • 40
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    10
    • Citation Indexes
      10
  • Captures
    40

Article Description

This study examines the relationship between the consistency of book-tax differences and the quality of analysts’ earnings forecasts. We find that the consistency of book-tax differences is associated with more accurate and informative forecasts. This suggests that the information embedded in the consistency of book-tax differences plays an important role in elevating the quality of analysts’ forecasts. Furthermore, the effect of consistency in book-tax differences on analyst forecast quality is greater for firms with noisier information environment. Finally, we find that the relation between consistency in book-tax differences and improvements in forecast accuracy and informativeness is stronger after the implementation of Regulation Fair Disclosure, which increased the role of public information in analysts’ forecasts.

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