Economic crisis and market rewards to meeting or beating analysts' earnings forecasts: Evidence from Korea

Abstract

We examine whether the market premium to meeting or beating analysts' earnings forecasts vary according to the economic conditions. Using a sample of Korean firms that suffered the Asian Crisis in 1997-98 as well as the worldwide Financial Crisis in 2008, we find that the market rewards to meeting or beating earnings expectations is higher for economic crisis periods compared to those for other periods, thereby indicating that investors react more positively to good news in bad times. © 2014 International Information Institute.