Accounting Seminar: Professor Phil Shane
Do Financial Analysts Generate Value-Relevant Interpretive Information from Analysis of 10-K Filings?
Many papers in the academic and practitioner literature question the value-relevance of sell-side analysts' interpretation of information in 10-K filings. This paper compares the information content of analysts' earnings forecast revisions that straddle 10-K filings to that of forecast revisions straddling earnings announcements. We find that 10-K-related forecast are associated with more improvement in earnings forecast accuracy and more post-revision drift in stock returns. The evidence also suggests that increased uncertainty created by greater complexity, opacity, and volume of information in 10-K filings causes analysts to react with more restraint than the restraint associated with their reaction to information released around the time of earnings announcements. We also find that this analyst underreaction fully explains the post-revision drift in stock prices. More generally, our results are consistent with the inference that analysts play an important interpretive role with respect to information in firms' 10-K filings.
Professor Shane’s research focuses mainly on the role of financial analysts as intermediaries in the interpretation of accounting information for resource allocation in capital markets. Professor Shane has presented his research at many national and international conferences sponsored by the American Accounting Association, the American Finance Association, the European Accounting Association, and the Global Finance Association. His research has been published in journals such as The Accounting Review; Journal of Accounting Research; Journal of Accounting and Economics; Contemporary Accounting Research; Decision Sciences; Journal of Accounting, Auditing & Finance; International Journal of Forecasting; and the Financial Analysts Journal. He served as president of the Financial Accounting and Reporting Section of the American Accounting Association (2007-2008), and he held the Academic Research Fellow position at the Financial Accounting Standards Board (2010-2011).