THE EFFECT OF ENTERPRISE RESOURCE PLANNING SYSTEM (ERP) IMPLEMENTATIONS ON THE PROPERTIES OF ANALYST FORECASTS.

We know from earlier studies that the implementation of Enterprise Resource Planning (ERP) systems has allowed companies to process, prepare, and disseminate accounting information more quickly and accurately than the legacy accounting systems that they replaced. However, ERP systems also provide a greater opportunity for companies to manage earnings. In this study, we examine if ERP implementations have improved the information environment for equity analysts. Using implementation data from a major ERP software provider, we find that the magnitude of analyst forecast accuracy decreased and its standard deviation increased soon after ERP implementations. These results hold even when we control for discretionary accruals. [ABSTRACT FROM AUTHOR]