- Title
- How well do analysts really understand asymmetric cost behaviour?
- Creator
- Wu, Minzhi; Wilson, Mark
- Relation
- Accounting & Finance Vol. 62, Issue 3, p. 3951-3985
- Publisher Link
- http://dx.doi.org/10.1111/acfi.12911
- Publisher
- John Wiley & Sons
- Resource Type
- journal article
- Date
- 2022
- Description
- Prior literature suggests analysts have a very poor understanding of asymmetric cost behaviour (‘ACB’) and ‘converge to the average’ when incorporating this behaviour in forecasts. However, we show that the extent of bias arising from sticky costs is greater for firms (‘Defenders’) employing strategic approaches for which ACB is less commonly observed, and that ACB typically has no association with forecast errors for firms who typically demonstrate high degrees of cost stickiness (‘Prospectors’). Our findings are consistent with analysts having a meaningful understanding of ACB and cross-sectional differences in the likelihood of its incidence.
- Subject
- analyst forecasts; analyst experience; asymmetric cost behaviour; firms
- Identifier
- http://hdl.handle.net/1959.13/1468142
- Identifier
- uon:48008
- Identifier
- ISSN:0810-5391
- Rights
- © 2022 The Authors. Accounting &inance published by John Wiley & Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
- Language
- eng
- Full Text
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