Large earnings surprises and negative earnings surprises represent more egregious errors
in analysts' earnings forecasts. We find evidence consistent with our expectation that
egregious forecast errors motivate analysts to work harder to develop or acquire relatively
more private information in an effort to avoid future forecasting failures. Specifically, we find
that after large or negative earnings surprises there is a greater reduction in the error in
individual analysts' forecasts of future earnings, and these individual forecasts are based …