The impact of equity incentives on the accuracy of analyst's earning forecasts

Abstract EN

This study use a sample which consists of 88 observations of Egyptian listed firms, from the period of 2009 – 2019, this research examine the effect of equity incentive types on the information and knowledge environment of financial analysts, as expressed in the reports of analysts in the form of earning forecasts and stock recommendations.

In addition, analysts’ forecast accuracy can be improved when companies prefer and select using restricted stock units (RSUs) as a type of reward managers, instead of stock options, in their reward program, assuming that the two forms of stock compensations (stock options or RSUs) have different and significant impacts on the accuracy of analysts’ forecasts.

Finally findings revealed positive relationship between forecast accuracy and recommendations as financial analysts serve as information intermediaries by providing reports that include earnings forecasts and their stock recommendations.

These recommendations help investors to make their decisions.