INTERNATIONAL SAMPLE

We obtained forecast data from the I/B/E/S International Summary files and reported (or actual) data from the I/B/E/S International Actual files. These files provide consensus analyst forecasts and reported numbers for various value drivers at a monthly frequency. The actual measures are from the most recently published annual report, and the forecast measures we used are the consensus (mean) estimates during the month for the next full fiscal period. For example, the actual EPS for a U.S. calendar-year company in May of 1990 would refer to the EPS reported for 1989 (announced sometime early in 1990), and the forecast EPS would refer to the consensus EPS forecast for 1991, based on forecasts available as of the third Friday in May 1990.3 We also obtained per share prices as of that date from I/B/E/S. Even though we refer to the prior year’s EPS as actual or reported EPS, I/B/E/S often adjusts these data to remove some one-time items that analysts did not forecast. Because operating cash flow numbers are derived from earnings, actual operating cash flows reported by I/B/E/S may have also been adjusted to remove some one-time items. I/B/E/S makes no adjustments to actual dividends.

I/B/E/S currently collects forecasts for 63 countries, but the number of observations is relatively small for many countries. We identified the following 10 countries as having the most data available for earnings forecasts: Australia, Canada, France, Germany, Hong Kong, Japan, South ...

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