Security Analyst Experience and Post-Earnings-Announcement Drift

Michael B. Mikhail, Richard H. Willis, Beverly R. Walther

Research output: Contribution to journalReview articlepeer-review

13 Scopus citations


Prior research suggests that various financial anomalies are related to investors’ inability to process historical earnings and price information. In particular, analysts’ failure to incorporate appropriately the serial correlation in earnings surprises provides at least a partial explanation for post-earnings-announcement drift. Because prior work documents that analysts more fully incorporate the information in prior earnings surprises as they gain experience, we examine if firms followed by more experienced analysts exhibit less drift. Measuring analyst firm-specific forecasting experience as the number of prior quarters for which the analyst has issued an earnings forecast for the firm, we find that post-earnings-announcement drift associated with firms with a more experienced analyst following is 18 percent less than that for firms with a less experienced analyst following. This result suggests that the efficiency of a firm’s market price is affected by the aggregate experience level of its analyst following.

Original languageEnglish (US)
Pages (from-to)529-550
Number of pages22
JournalJournal of Accounting, Auditing & Finance
Issue number4
StatePublished - Oct 2003

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics, Econometrics and Finance (miscellaneous)


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