Cost behavior and analysts' earnings forecasts

Dan Weiss*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


This study examines how firms' asymmetric cost behavior influences analysts' earnings forecasts, primarily the accuracy of analysts' consensus earnings forecasts. Results indicate that firms with stickier cost behavior have less accurate analysts' earnings forecasts than firms with less sticky cost behavior. Furthermore, findings show that cost stickiness influences analysts' coverage priorities and investors appear to consider sticky cost behavior in forming their beliefs about the value of firms. This study integrates a typical management accounting research topic, cost behavior, with three standard financial accounting topics (namely, accuracy of analysts' earnings forecasts, analysts' coverage, and market response to earnings surprises).

Original languageEnglish
Pages (from-to)1441-1471
Number of pages31
JournalAccounting Review
Issue number4
StatePublished - Jul 2010


  • Analysts
  • Asymmetric cost behavior
  • Earnings forecasts
  • Sticky costs


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