Do Analysts Fully Appreciate the Implications of Customer Concentration for Future Earnings?

Abstract

Customer concentration is a positive leading indicator of the company's future performance This study explores whether analysts can fully understand the meaning of customer concentration on future earnings and reflect it in their earnings forecast Customer concentration is a non-financial leading indicator with high complexity and its impact on the company's operation and profit will vary with whether the company is in the initial stage or in the mature stage The more complex the forecast information is the analysts will not be able to make accurate financial forecasts Therefore this paper expects that analysts cannot fully understand the implication of customer concentration on future earnings The empirical results show that there is a positive correlation between the change of customer concentration and analysts' prediction bias which means that analysts can not fully understand the meaning of customer concentration on future earnings

Date of Award	2020
Original language	English
Supervisor	Ting-Kai Chou (Supervisor)