The Roles of Data Providers and Analysts in the Production, Dissemination, and Pricing of Street Earnings

63 Pages Posted: 30 Jul 2018 Last revised: 23 May 2022

See all articles by Khrystyna Bochkay

Khrystyna Bochkay

University of Miami - School of Business Administration

Stanimir Markov

University of Texas at Dallas - Naveen Jindal School of Management

Musa Subasi

University of Maryland-College Park - Robert H. Smith School of Business

Eric H. Weisbrod

University of Kansas - School of Business

Date Written: January 19, 2021

Abstract

In September 2009, Thomson Reuters (TR) discontinued its practice of relying on analysts to determine the treatment of unexpected charges and gains in favor of their immediate exclusion from GAAP earnings. Adopting a difference-in-differences approach, we show that this plausibly exogenous change in TR’s methodology resulted in street earnings that are more predictive of future performance; and timelier, more accurate, and less dispersed analyst forecasts of future earnings, consistent with TR enhancing the properties of street earnings and analyst forecasts. Finally, using path analysis we show that a significant portion of TR’s effect on price discovery is through its effect on analysts; and that the change in TR’s treatment of unexpected items increased (decreased) the relative influence of TR (analysts) on the pricing of street earnings. We conclude that forecast data providers like TR are more than a conduit of information from analysts to investors.

Keywords: street earnings processing, forecast data providers, analyst information production, price discovery

JEL Classification: M41, G14, G23

Suggested Citation

Bochkay, Khrystyna and Markov, Stanimir and Subasi, Musa and Weisbrod, Eric H., The Roles of Data Providers and Analysts in the Production, Dissemination, and Pricing of Street Earnings (January 19, 2021). University of Miami Legal Studies Research Paper No. 3219449, University of Miami Business School Research Paper No. 3219449, Available at SSRN: https://ssrn.com/abstract=3219449 or http://dx.doi.org/10.2139/ssrn.3219449

Khrystyna Bochkay

University of Miami - School of Business Administration ( email )

Coral Gables, FL 33146-6531
United States

Stanimir Markov

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States
972 883 5166 (Phone)

Musa Subasi

University of Maryland-College Park - Robert H. Smith School of Business ( email )

University of Maryland-College Park
4332N Van Munching Hall
College Park, MD 20742
United States
301-314-1055 (Phone)

Eric H. Weisbrod (Contact Author)

University of Kansas - School of Business ( email )

1300 Sunnyside Avenue
Lawrence, KS 66045
United States

HOME PAGE: http://https://business.ku.edu/eric-weisbrod

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