The Interpretation of Unanticipated News Arrival and Analysts' Skill

Amir Rubin, Benjamin Segal*, Dan Segal

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

16 Scopus citations


Analysts' functions are divided into discovery and interpretation roles, but distinguishing between the two is nontrivial. We conjecture that analysts' interpretation skill can be gauged by their forecast revisions following material unanticipated news, in particular, following nonearnings 8-K reports, which arrive at the market unexpectedly. We establish that unanticipated 8-Ks are informative for analysts and find that analysts who are more likely to revise their forecasts following unanticipated 8-Ks provide more timely and accurate forecasts. We document a positive association between analysts' tendency to react to unanticipated 8-Ks and market reaction to their recommendation changes, suggesting investors prefer these analysts' opinions.

Original languageAmerican English
Pages (from-to)1491-1518
Number of pages28
JournalJournal of Financial and Quantitative Analysis
Issue number4
StatePublished - 1 Aug 2017

Bibliographical note

Publisher Copyright:
© 2017 Michael G. Foster School of Business, University of Washington.


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