The Impacts Of CEO Turnover & Degree Of Internationalization On The Accuracy Of Analyst Forecasts

Abstract

This study analyzes the impact of CEO turnover on the accuracy of analyst forecasts.  Specifically, it examines the level of information that becomes available to analysts covering firms with different levels of internationalization, a proxy for firm complexity, during periods surrounding these events. After controlling for analyst and firm characteristics, along with regulatory period variables, this study finds that the accuracy of analyst forecasts improves in periods immediately following the turnover event.  Results further indicate that the accuracy in the post-turnover period is greater for firms with lower levels of internationalization. In general, these findings are consistent with prior research describing the improvement of forecasts surrounding the CEO turnover event, the positive link between forecast accuracy and company disclosures, and finally, the negative link between analyst forecast accuracy and the complexity of the forecasting task.