• The Journal of Industrial Distribution & Business
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• v.11 no.1
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• pp.39-47
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• 2020

Purpose: This study investigated the effects of valuation errors on the capital market through the earnings forecasting errors of financial analysts. As a follow-up to Jensen (2005)'s study, which argued of agency cost of overvaluation, it was intended to analyze the effect of valuation errors on the earnings forecasting behavior of financial analysts. We hypothesized that if the manager tried to explain to the market that their firms are overvalued, the analysts' earnings forecasting errors would decrease. Research design, data and methodology: To this end, the analysis period was set from 2011 to 2018 of KOSPI and KOSDAQ-listed markets. For overvaluation, the study methodology of Rhodes-Kropf, Robinson, and Viswanathan (2005) was measured. The earnings forecasting errors of the financial analyst was measured by the accuracy and bias. Results: Empirical analysis shows that the accuracy and bias of analysts' forecasting errors decrease as overvaluation increase. Second, the negative relationship showed no difference, depending on the size of the auditor. Third, the results have not changed sensitively according to the listed market. Conclusions: Our results indicated that the valuation error lowered the financial analyst earnings forecasting errors. Considering that the greater overvaluation, the higher the compensation and reputation of the manager, it can be interpreted that an active explanation of the market can promote the accuracy of the financial analyst's earnings forecasts. This study has the following contributions when compared to prior research. First, the impact of valuation errors on the capital market was analyzed for the domestic capital market. Second, while there has been no research between valuation error and earnings forecasting by financial analysts, the results of the study suggested that valuation errors reduce financial analyst's earnings forecasting errors. Third, valuation error induced lower the earnings forecasting error of the financial analyst. The greater the valuation error, the greater the management's effort to explain the market more actively. Considering that the greater the error in valuation, the higher the compensation and reputation of the manager, it can be interpreted that an active explanation of the market can promote the accuracy of the financial analyst's earnings forecasts.

• Management & Information Systems Review
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• v.35 no.4
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• pp.213-227
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• 2016

This study examines the effects of managerial ability on information asymmetry. We use analyst forecast errors as a proxy for information asymmetry, because analysts are referred to as efficient users using firm-level data. The sample consists of 2,246 non-banking firm-years listed in Korea Stock Exchange(KOSPI) during the period 2000 to 2013. We measure managerial ability using DEA(Data Envelopment Analysis) following Demerjian et al.(2012). Using those measures, we examines the effects of managerial ability on analysts' earnings forecast errors and analysts' earnings forecast bias. The results of this study are as follows. First, we find that managerial ability are positively associated with analysts' earnings forecast accuracy. Second, we show that the firms with higher managerial ability tend to have lower the optimistic errors in analysts' earnings forecasts. This study could be useful for outside stakeholders to understand the importance of managerial ability.

• Journal of Distribution Science
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• v.17 no.10
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• pp.41-48
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• 2019

Purpose - This study investigates whether financial analysts consider the intangible investment implicit in selling, general, and administrative (SG&A) expenditures to forecast firms' future earnings. Research design, data, and methodology - Using 52,609 U.S. firm-year observations spanning 1984-2016, this study examines the association between the Intangible investment implicit in SG&A expenditures and properties of analysts' earnings forecasts. To estimate the Intangible investment of SG&A, I decompose SG&A excluding R&D and advertising expenditures into maintenance and investment components following Enache and Srivastava (2017). Results - The main results show that analysts' earnings forecast errors and dispersion in analysts' forecasts increase with the intangible investment derived from SG&A because the investment component of SG&A affects future earnings and the uncertainty of those earnings. However, these results are weakened in the wholesale and retail industries where firms have a higher level of investment component of SG&A. I attribute the weaker results to low R&D expenditures in those industries. Conclusion - This study indicates that financial analysts incorporate the intangible investment of SG&A into their earnings forecasts differently across firms and industries. Furthermore, this study supports the argument for the separate reporting of the investment nature of SG&A from other operating expenses such as maintenance nature of SG&A.

• Knowledge Management Research
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• v.13 no.5
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• pp.1-13
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• 2012

This study investigates whether firm-specifics affect forecast accuracy using a sample of IPO firms in Korea. The forecasts accuracy can be differentiated depending on firm specifics. This study uses the foreign investor, intangible asset and patents as firm specifics. The analysts are divided into two groups by firm-specifies(foreign investors ratio of low and high, intangible asset ratio of low and high, patents of acquisition) and also examine the degree of analysts's forecast accuracy over the two groups. and examined the degree of the analysts' forecast accuracy over the two groups. The sample is composed of 460 IPO (Initial Public Offering) firms listed on the KOSDAQ (Korean Securities Dealers Automated Quotations) for the period from 2001 to 2009. The analysts' forecast accuracy is much higher in the group of high foreign investor but is lower in the group of high intangible assets and patents. Also, the group of high foreign investors respectively interacts with group of high intangible assets ratio and group of patents of acquisition. In result, The analysts' forecast accuracy is higher because foreign investor is decreased information asymmetry. This study compares suggests that patents may be helpful for predicting forecast accuracy.

• Journal of Convergence for Information Technology
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• v.7 no.3
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• pp.105-109
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• 2017

This paper examines the effect of the analysts' earnings forecast revisions on stock price after the dividend announcement of the firms has been released. We show that the analysts' upward revisions on earnings forecasts are followed by the positive cumulative abnormal return. We also investigate the signalling effect and the confirmation effect with respect to the effect of the dividend announcement and the earnings forecast revisions on stock price. The test results show that the confirmation effect is stronger than the signalling effect. That is, the investors react only when the analysts' forecasts coincide with the preceding dividend announcement.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.43 no.4
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• pp.229-235
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• 2020

Investors aim to maximize the return rate for their own investment, utilizing various information as possible as they can access. However those investors, especially individual investors, have limitations of interpretation of the domain-specific information or even the acquisition of the information itself. Thus, individual investors tend to make decision affectively and frequently, which may cause a loss in returns. This study aims to analyze analysts' target price and to suggest the strategy that could maximize individual's return rate. Most previous literature revealed that the optimistic bias exists in the analysts' target price and it is also confirmed in this study. In this context, this study suggests the upper limit of target rate of returns and the optimal value named 'alpha(α)' which performs the adjustment of proposed target rate to maximize excess earning returns eventually. To achieve this goal, this study developed an optimization problem using linear programming. Specifically, when the analysts' proposed target rate exceeds 30%, it could be adjusted to the extent of 59% of its own target rate. As apply this strategy, the investors could achieve 1.2% of excess earning rate on average. The result of this study has significance in that the individual investors could utilize analysts' target price practically.

• Asia pacific journal of information systems
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• v.5 no.2
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• pp.227-257
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• 1995

Increasingly, systems analysts are expected to have behavioral and administrative skills as well as technical skills. This paper presents the results of a nationwide survey of 739 information systems (IS) managers (220 responses) and other functional managers (178) regarding the importance of various skills needed by systems analysts. The findings indicate that IS managers and three functional area managers differ in their perceptions of the importance of skills that system analysts should possess. These differences suggest that IS managers consider the ability to work with others more important than do functional managers. In contrast, three functional manager groups seem to view technical areas more importantly and thus may have greater expectations for technical performance. Also the results indicate that a positive relationship exists between possession of the identified skills and systems effectiveness.

• Nuclear Engineering and Technology
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• v.54 no.5
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• pp.1635-1643
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• 2022

STPA (System-Theoretic Process Analysis) is a widely used safety analysis technique to identify UCAs (Unsafe Control Actions) resulting in potential losses. It is totally dependent on the experience and ability of analysts to construct an information model called Control Structures, upon which analysts try to identify unsafe controls between system components. This paper proposes a formal approach to support the manual identification of UCAs, effectively and systematically. It allows analysts to mechanically extract Process Model, an important element that makes up the Control Structures, from a formal requirements specification for a software controller. It then concisely constructs the contents of Context Tables, from which analysts can identify all relevant UCAs effectively, using a software fault tree analysis technique. The case study with a preliminary version of a Korean nuclear reactor protections system shows the proposed approach's effectiveness and applicability.

• Journal of Korean Society of Occupational and Environmental Hygiene
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• v.28 no.1
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• pp.108-116
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• 2018

Objectives: This study investigated to the analytical work environment, analyst's expert and status of analytical instrument in the designated organization's laboratory for measuring work environment, and carried out to ensure reliability of analytical results. Methods: This study was conducted by 114 analysts who work in designated organization's laboratory for measuring work environment. Information on the working environment and personal characteristics of the analysts were collected using a self-reported questionnaire and were analyzed using the SPSS program through analysis of frequency and t-test. Results: The speciality of subjects was occupational health(57.0%), environmental health(38.6%) and environmental engineering(4.4%), and they had a higher level of academic ability than workers in other industries. Analysts had to handle a large number of sample analysis and many tasks other than analytical work. The analysts answered that it was difficult to analyze organic substances than inorganic substances, and the difficult parts were the analytical methods setting of new substances(55.3%), instrument analysis(24.6%) and principle of analysis(23.7%). Analytical instruments mainly have legally required instruments. The difficulty of the analysis is solved from the senior analyst in the laboratory and analytical information is mainly exchanged through seminar organized by the Association of Occupational Health Analysts. The analysts who are planning to move or considering the company were 48.2%, and the reasons for moving the company were difficult to work(14.0%), low salary(9.6%), employment type(8.8%) and job stress(7.0%). Conclusions: The conclusions of our study were that it was possible to secure reliability by solving the problems such as implementing professional education to improve expertise of analysts, strengthening analytical instruments through institutional improvement and improving work environment.

• KSII Transactions on Internet and Information Systems (TIIS)
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• v.14 no.8
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• pp.3420-3436
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• 2020

Due to the increasing number of malicious software (also known as malware), methods for sharing threat information are being studied by various organizations. The Malware Attribute Enumeration and Characterization (MAEC) format of malware is created by analysts, converted to Structured Threat Information Expression (STIX), and distributed by using Trusted Automated eXchange of Indicator Information (TAXII) protocol. Currently, when sharing malware analysis results, analysts have to manually input them into MAEC. Not many analysis results are shared publicly. In this paper, we propose an automated MAEC conversion technique for sharing analysis results of malicious Android applications. Upon continuous research and study of various static and dynamic analysis techniques of Android Applications, we developed a conversion tool by classifying parts that can be converted automatically through MAEC standard analysis, and parts that can be entered manually by analysts. Also using MAEC-to-STIX conversion, we have discovered that the MAEC file can be converted into STIX. Although other researches have been conducted on automatic conversion techniques of MAEC, they were limited to Windows and Linux only. In further verification of the conversion rate, we confirmed that analysts could improve the efficiency of analysis and establish a faster sharing system to cope with various Android malware using our proposed technique.