Adaptive Expectations, Time-Series Models, and Analyst Forecast Revision.

The article refers to interim financial reports and their effect on analysts' earnings forecasts and revisions. The "adaptive expectations" model has a reaction coefficient to identify the size and direction of a market response to errors. Forecasting behavior includes how analysts use financial reports and time-series information to make revisions. Explanations of algebraic expressions for predicting one-quarter-ahead forecast revisions and two- and three-quarter-ahead forecast revisions are given. Significance of nonearnings information in forecasting, suggestion that time-series models need an autoregressive parameter, and the revision process that is shared by ARIMA, or Box-Jenkins forecasting, and adaptive expectations models are mentioned.