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dc.contributor.authorCiftci, Mustafa
dc.contributor.authorMashruwala, Raj
dc.contributor.authorWeiss, Dan
dc.date.accessioned2014-03-27T05:44:19Z
dc.date.available2014-03-27T05:44:19Z
dc.date.issued2014-03-27
dc.identifier.urihttp://hdl.handle.net/11073/6068
dc.description.abstractRecent work in management accounting offers several novel insights into firms' cost behavior. This study explores whether financial analysts appropriately incorporate information on two types of cost behavior in predicting earnings - cost variability and cost stickiness. Since analysts' utilization of information is not directly observable, we model the process of earnings prediction to generate empirically testable hypotheses. The results indicate that analysts "converge to the average" in recognizing both cost variability and cost stickiness, resulting in substantial and systematic earnings forecast errors. Particularly, we find a clear pattern - inappropriate incorporation of available information on cost behavior in earnings forecasts leads to larger errors in unfavorable scenarios than in favorable ones. Overall, enhancing analysts' awareness of the expense side is likely to improve their earnings forecasts, mainly when sales turn to the worse.en_US
dc.description.sponsorshipSchool of Business Administrationen_US
dc.description.sponsorshipDepartment of Accountingen_US
dc.language.isoen_USen_US
dc.publisherAmerican University of Sharjahen_US
dc.relation.ispartofseriesSchool of Business Administration Working Paper Seriesen_US
dc.relation.ispartofseriesAmerican University of Sharjah Faculty Worken_US
dc.subjectcost stickinessen_US
dc.subjectcost variabilityen_US
dc.subjectanalysts' earnings forecastsen_US
dc.subjectexpense forecastsen_US
dc.titleImplications of Cost Behavior for Analysts' Earnings Forecastsen_US
dc.typeWorking Paperen_US


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