The Implications of Using Stock-Split Adjusted I/B/E/S Data in Empirical Research

Jeff L. Payne, Wayne B. Thomas

Research output: Contribution to journalArticlepeer-review

167 Scopus citations

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.

Original languageEnglish
Pages (from-to)1049-1067
Number of pages19
JournalAccounting Review
Volume78
Issue number4
DOIs
StatePublished - Oct 2003

Keywords

  • Analysts' forecast errors
  • Dispersion
  • Earnings
  • Earnings announcement returns
  • Earnings changes
  • Misclassification

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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