Ghasem blue; Zahra Farjam
Abstract
Aware of the economic performance of the business in the future will help potential investors and Creditors in economic decisions. Investment decision taken on the basis of forecasted earnings. Therefore the accuracy of these predictions is important. Prior research has shown that cost forecast error ...
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Aware of the economic performance of the business in the future will help potential investors and Creditors in economic decisions. Investment decision taken on the basis of forecasted earnings. Therefore the accuracy of these predictions is important. Prior research has shown that cost forecast error is more than sales forecast error and has more effect on the earning forecast error and claimed that this error is due to ignoring the cost behavior. This research was investigated cost behavior forecast accuracy by studying 104 company from 2010-2015. Samples were separated to companies with symmetrical (equal) favorable and unfavorable sales forecast error and were compared. T test and Mann-Whitney tests were used for this purpose. The results showed that managers are not predicting the cost variability correctly; however, due to the symmetry of the earning forecast error in firms with equal sales forecasting error, it can be concluded that managers generally pay attention to cost behavior in their predictions. In other words, according to the proportion of sales forecast error and cost forecast error, the main reason for the earning forecast error is the error in predicting sales.
H. Khaleghi Moghadam; F. Karami
Volume 6, Issue 23 , October 2008, , Pages 19-41
Abstract
This paper aims to evaluate the earning forecasting model based on cost variability and cost stickiness in comparison to other forecasting models. Cost stickiness means that the rate of decrease in costs while sale declines is less than the rate of increase in costs while sale grows. In other ...
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This paper aims to evaluate the earning forecasting model based on cost variability and cost stickiness in comparison to other forecasting models. Cost stickiness means that the rate of decrease in costs while sale declines is less than the rate of increase in costs while sale grows. In other word, costs are sticky downward. The data used in this research was gathered from 85 companies accepted in Tehran stock market from 1994 to 2004. To analyze the data two regression techniques called simple and rolling methods and also confidence coefficient R2 and F test are used. The results indicate that the power of the earning forecasting model based on cost variability and cost stickiness is significantly more than the others'.
