Analysts' Reactions to Warnings of Negative Earnings Surprises.

The article discusses the reaction of analysts to qualitative warnings of adverse earnings in the United States. The article attempts to reconcile analysts' more negative forecast revisions and the apparently conflicting anecdotal evidence that suggests more positive responses to firms that warn. It is suggested in the article that two possible causes for negative reactions to warnings are; market particpants' believing that warning firms may cause a more permanent earnings decline, and an overreaction may occur.