Benchmarking Habituality and Idiosyncrasies – A Perspective From Beating Analyst Forecasts

Abstract

This study aims to find idiosyncrasies of firms that habitually beat analysts’ forecasts by big margins. From the perspectives of earnings smoothing, capital structure, and earnings management, I find that these firms are in greater need for external financing, guide analyst forecasts downward more frequently, have more assets in collateral form, and are less unique and profitable than firms that habitually meet/marginally beat analysts’ forecasts. This study contributes to the earnings management literature by finding some idiosyncrasies of those firms that consistently beat analysts’ forecasts by big margins. These idiosyncrasies are also helpful to investors who plan to invest strategically.