Date Available


Year of Publication


Degree Name

Doctor of Philosophy (PhD)

Document Type

Doctoral Dissertation


Business and Economics



First Advisor

Dr. Nicole Thorne Jenkins

Second Advisor

Dr. Hong Xie


Analysts’ earnings per share (EPS) forecasts are one of the most widely used indicators of firm performance by market participants and firm executives. There are two components in EPS forecasts, but prior literature almost invariably focuses on the net income component (numerator) and ignores the shares outstanding component (denominator). Changes in shares outstanding mechanically alter EPS forecasts due to a changed denominator. These mechanical changes in EPS forecasts, however, do not reflect a firm’s real performance. Therefore, it is important to understand analysts’ share adjustment behaviors in order to better interpret analysts’ EPS revisions after share changing events. This paper uses the setting of open market repurchase (OMR) announcements to explore analysts’ share adjustment behaviors. The main findings include that, first, when analysts revise EPS forecasts after repurchase announcements, they adjust the denominator downward based on their estimates of the number of shares to be repurchased by the firms; and the number of days that analysts follow the repurchase firms and the uncertainties of repurchase announcements influence analysts’ share adjustment behaviors. Second, the numerator-driven EPS forecast revisions, which remove the mechanical denominator-driven revisions, are more predictive of a firm’s future operating performance than the actual EPS forecast revisions as reported by analysts. Lastly, market participants fail to process the implications of the denominator-driven EPS forecast revisions.

Digital Object Identifier (DOI)