Do Analysts’ EPS Forecasts Obey Benford’s Law? An Empirical Analysis
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Published:2022-08-08
Issue:2
Volume:23
Page:773-785
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ISSN:1511-6670
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Container-title:International Journal of Business and Society
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language:
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Short-container-title:IJBS
Abstract
Benford’s law gives the expected frequencies of digits in tabulated data. In this study, I investigate the extent to which a sample of analysts’ earnings per share (EPS) forecasts obey Benford’s law. I conduct Benford’s law’s second digit and last-two digits tests on a sample of analyst EPS forecasts of S&P 500 firms from 1998 to 2018. Overall, I find that analysts’ EPS forecasts obey Benford’s law’s second digit test but do not obey the last-two digits test. These findings suggest that while analysts do not engage in number invention, they do engage in rounding when making EPS forecasts.
Publisher
UNIMAS Publisher
Subject
Strategy and Management,Economics and Econometrics,Finance,Business and International Management