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korean management review - Vol. 50, No. 3

[ Article ]
korean management review - Vol. 50, No. 3, pp.777-804
Abbreviation: kmr
ISSN: 1226-1874 (Print)
Print publication date 30 Jun 2021
Received 24 Sep 2020 Revised 09 Jan 2021 Accepted 27 Jan 2021

The Effect of Corporate Life Cycle on Analyst Earnings Forecast Accuracy
Woo Jae Lee
(First Author) Jeonbuk National University (

기업의 수명주기가 재무분석가의 이익예측 정확성에 미치는 영향

This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.
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This study examines the impact of a firm’s life cycle on the accuracy of analyst forecasts by considering the life cycle as a proxy of time-series change in a firm’s environment. The results show that the accuracy of analyst forecasts is lower in introduction and decline stages than the other stages. In contrast, forecasts in the growth and mature stages show relatively higher accuracy. Furthermore, the systematic association between life cycle stage and the accuracy of analyst forecast is derived from firms reporting high quality accruals and clients of Big 4 auditors. The results are consistent in case of using the two-stage regression tests to mitigate endogeneity concern existing in firms between analyst-followed and non-followed. Also, the results are robust when using the forecasts that are close to the earnings announcement date and those that are not. This study extends prior research that finds the effect of firm-level characteristics on analysts forecasting activities by exploring the macro-level consequences through life cycle stages.

Keywords: Corporate life cycle, analyst earnings forecast, forecast accuracy, analyst following, accounting quality


This research was supported by “Research Base Construction Fund Support Program” funded by Jeonbuk National University in 2020.

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∙ The author Woo Jae Lee is an assistant professor at Department of Accounting, College of Commerce, Jeonbuk National University. Her primary research interests are accounting transparency and quality. Recent research projects integrate accounting issues with social environment.