Earnings forecasts in enterprise information systems environment

Research output: Contribution to journalArticle

15 Scopus citations

Abstract

With the globalisation and integration of world financial markets, the application of enterprise information systems has become more and more popular in the financial service sector. This paper examines the analyst's decision regarding allocation of effort to the precision and timeliness of earnings forecasts with financial decision support systems. Once an analyst decides to follow a firm, the analyst must choose the level of effort to devote to generating outputs, such as earnings forecasts. This paper provides insights into this by examining three issues concerning the forecasts of the individual analyst. First, forecast accuracy and frequency are modelled simultaneously. Then, whether these two effort allocation choices are complements or substitutes is tested. Finally, how competition affects these two characteristics is examined. The accuracy and frequency are examined with simultaneous equations. Results from this analysis suggest that analysts allocate effort among these two forecast criteria in a complementary way. Finally, empirical results reveal a positive association between competition and forecast frequency by the individual analyst. However, a significant association between competition and the individual analyst's forecast accuracy is not found.

Original languageEnglish (US)
Pages (from-to)1-19
Number of pages19
JournalEnterprise Information Systems
Volume2
Issue number1
DOIs
StatePublished - Feb 1 2008
Externally publishedYes

Keywords

  • Competition
  • Decision support systems
  • Enterprise application
  • Enterprise information systems for financial sector
  • Enterprise management
  • Enterprise resource planning systems
  • Financial analysts' forecasts
  • Financial sector
  • Forecast accuracy
  • Forecast frequency

ASJC Scopus subject areas

  • Computer Science Applications
  • Information Systems and Management

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