The Implications of Using Stock-Split Adjusted I/B/E/S Data in Empirical Research
34 Pages Posted: 17 Apr 2002
There are 2 versions of this paper
The Implications of Using Stock-Split Adjusted I/B/E/S Data in Empirical Research
Date Written: April 2003
Abstract
The purpose of this study is to highlight issues of interest to researchers employing the I/B/E/S earnings and forecast data. I/B/E/S has traditionally provided per share data on a split-adjusted basis, rounded to the nearest penny. In doing so, per share amounts are comparable over time. However, because not all prior forecasts and earnings per share amounts divide precisely to a penny, adjusting for stock splits and rounding to the nearest penny can cause a loss of information. Researchers are prohibited in many cases from determining the amounts actually reported in prior years, leading to misclassified observations. We obtain actual (unadjusted) earnings and forecast data from I/B/E/S and compare results to those generated using the adjusted I/B/E/S data. We replicate prior studies and find that conclusions are affected when using the actual I/B/E/S data.
Keywords: Analysts' Forecast Errors, Earnings, Earnings Changes, Earnings Announcement Returns, Dispersion, Misclassification
JEL Classification: M41, G29
Suggested Citation: Suggested Citation
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