Download or read book Forecast Accuracy of Individual Analysts written by Patricia C. O'brien and published by Forgotten Books. This book was released on 2016-09-26 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Excerpt from Forecast Accuracy of Individual Analysts: A Nine-Industry Study Second, because the error terms in the fixed effects model are severely non normal, a non-parametric approach is taken. The non-parametric tests compare, for each industry, the observed distribution of analysts' average (through time) ranks with the distribution which would be expected if all analysts are alike, and each year is an independent observation. The non-parametric tests fail to reject the hypothesis that the observed distribution is identical to the expected distribution, in eight of the nine industries. Continuing research will investigate the source of the differences in the single industry in which the null hypothesis is rejected. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.

Download or read book The Effect of Industry Diversification on Consensus and Individual Analysts Earnings Forecasts written by Kimberly Dunn and published by . This book was released on 1998 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effects of company diversification and analyst diversification on consensus and individual analysts' earnings forecasts. Company diversification is measured both as the number of segments reported by a company and as an entropy measure which decomposes the total diversification into an unrelated and a related component. For the consensus forecast analysis, we examine the effect of these variables both on forecast accuracy and inter-analyst earnings forecast disagreement. For the individual analyst forecast analysis, we examine the effect of the number of business segments followed by an analyst and analyst diversification on individual analyst forecast accuracy. We develop a new measure of individual analyst's diversification which takes into consideration the business segments of all companies followed by an analyst, and its interaction with the business segments of the company whose earnings are being forecasted. The results of our study show that as the level of a company's total diversification increases, analysts are less accurate in their earnings forecasts and have more inter-analyst disagreement. Analysts are less accurate and have more disagreement as unrelated diversification increases. A company's related diversification has no significant impact on these variables. For both forecast accuracy and inter-analyst disagreement, the impact of a unit of unrelated diversification is significantly higher than that of the impact of a unit of related diversification. For individual analysts' earnings forecasts, as the number of business segments followed by an analyst increases and as his level of diversification increases, his earnings forecast accuracy significantly declines. The results of our study have implications for researchers who use analysts? earnings forecasts in their studies, investors who use these forecasts for company valuation and for brokerage firms in evaluating individual analysts.

Download or read book New Determinants of Analysts Earnings Forecast Accuracy written by Tanja Klettke and published by Springer Science & Business. This book was released on 2014-04-28 with total page 120 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial analysts provide information in their research reports and thereby help forming expectations of a firm’s future business performance. Thus, it is essential to recognize analysts who provide the most precise forecasts and the accounting literature identifies characteristics that help finding the most accurate analysts. Tanja Klettke detects new relationships and identifies two new determinants of earnings forecast accuracy. These new determinants are an analyst’s “general forecast effort” and the “number of supplementary forecasts”. Within two comprehensive empirical investigations she proves these measures’ power to explain accuracy differences. Tanja Klettke’s research helps investors and researchers to identify more accurate earnings forecasts.

Download or read book Financial Analysts Forecasts and Stock Recommendations written by Sundaresh Ramnath and published by Now Publishers Inc. This book was released on 2008 with total page 125 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial Analysts' Forecasts and Stock Recommendations reviews research related to the role of financial analysts in the allocation of resources in capital markets. The authors provide an organized look at the literature, with particular attention to important questions that remain open for further research. They focus research related to analysts' decision processes and the usefulness of their forecasts and stock recommendations. Some of the major surveys were published in the early 1990's and since then no less than 250 papers related to financial analysts have appeared in the nine major research journals that we used to launch our review of the literature. The research has evolved from descriptions of the statistical properties of analysts' forecasts to investigations of the incentives and decision processes that give rise to those properties. However, in spite of this broader focus, much of analysts' decision processes and the market's mechanism of drawing a useful consensus from the combination of individual analysts' decisions remain hidden in a black box. What do we know about the relevant valuation metrics and the mechanism by which analysts and investors translate forecasts into present equity values? What do we know about the heuristics relied upon by analysts and the market and the appropriateness of their use? Financial Analysts' Forecasts and Stock Recommendations examines these and other questions and concludes by highlighting area for future research.

Download or read book FORECAST ACCURACY OF INDIVIDUAL ANALYSTS IN NINE INDUSTRIES written by PATRICIA C. O'BRIEN and published by . This book was released on 1990 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Incremental Predictive Ability of Individual Financial Analysts written by Marc Andrew Giullian and published by . This book was released on 1996 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial analysts are among the most influential group of users of financial accounting information. Because the FASB has advocated usefulness as the "overriding criterion" (FASB, 1980, p.26) to judge accounting choices, accountants have a stake in understanding this important group of financial statement users. The majority of existing accounting research concerning financial analysts focuses on aggregated analysts' earnings forecasts rather than individual analysts' forecasts. Studies in accounting have documented the superiority of aggregated analysts' earnings forecasts relative to models. This is in contrast to the robust result from years of judgment/decision making (JDM) research that human predictions are inferior to statistical model predictions. Prior accounting studies have also documented that analysts exhibit optimism when forecasting earnings. Humans can make a significant contribution to accurate forecasting in spite of cognitive limitations. Some skills people bring to bear are cue identification, rapid adaptability to environmental changes and the evaluation of qualitative factors. Although statistical models are not well-equipped to utilize qualitative factors and be adaptable, they do offer consistency and significant computational power. Thus, the strengths of humans and statistical models in forecasting are complementary. This research documents the incremental predictive ability of both individual financial analysts and statistical models in forecasting earnings. It also provides evidence that both individual financial analysts' and statistical models' incremental predictive ability varies between industries. In addition, tests show a pessimistic bias for individual analysts, contrary to prior studies. Additional evidence is presented regarding forecast accuracy for four different forecast generation methods.

Download or read book Handbook Of Financial Econometrics Mathematics Statistics And Machine Learning In 4 Volumes written by Cheng Few Lee and published by World Scientific. This book was released on 2020-07-30 with total page 5053 pages. Available in PDF, EPUB and Kindle. Book excerpt: This four-volume handbook covers important concepts and tools used in the fields of financial econometrics, mathematics, statistics, and machine learning. Econometric methods have been applied in asset pricing, corporate finance, international finance, options and futures, risk management, and in stress testing for financial institutions. This handbook discusses a variety of econometric methods, including single equation multiple regression, simultaneous equation regression, and panel data analysis, among others. It also covers statistical distributions, such as the binomial and log normal distributions, in light of their applications to portfolio theory and asset management in addition to their use in research regarding options and futures contracts.In both theory and methodology, we need to rely upon mathematics, which includes linear algebra, geometry, differential equations, Stochastic differential equation (Ito calculus), optimization, constrained optimization, and others. These forms of mathematics have been used to derive capital market line, security market line (capital asset pricing model), option pricing model, portfolio analysis, and others.In recent times, an increased importance has been given to computer technology in financial research. Different computer languages and programming techniques are important tools for empirical research in finance. Hence, simulation, machine learning, big data, and financial payments are explored in this handbook.Led by Distinguished Professor Cheng Few Lee from Rutgers University, this multi-volume work integrates theoretical, methodological, and practical issues based on his years of academic and industry experience.

Download or read book Three Essays on Analyst Earnings Forecast written by Wenjuan Xie and published by . This book was released on 2008 with total page 138 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Individual Analysts Earnings Forecasts written by Dimitris Kenourgios and published by . This book was released on 2005 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents an analysis of two forms of overreaction (generalized overreaction and overreaction to prior earnings changes) in analysts' earnings forecasts for the UK stock market, using a sample of individual forecasts of earning per share from a British investment bank over the period 1989-2002. Given that previous UK empirical research over 1980s and mid '90s has provided limited and contradictory findings, we investigate whether and how overreaction of analysts forecasts varies across forecast horizons, firm size (small and large) and growth opportunities (high and low P/E ratio) in order to provide further and comparable evidence. Overall, our findings support the generalized overreaction hypothesis but reject the firm size effect, the overreaction for high P/E ratio companies and the higher overreaction regarding the forecasting horizon.

Download or read book Which Matters Accuracy or Boldness Analysts Earnings Forecast and Institutional Holdings written by Min-Hsien Chiang and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper aims to investigate the effect of financial analysts' earnings forecast on the institutional trading. In specific, we address three issues regarding the effect of financial analysts earnings forecast on the institutional holdings: (1) Do institutional investors pay more attention and more sensitive to analyst earnings forecast with higher forecast accuracy? (2) Do institutional investors prefer analysts with higher accuracy on earnings forecast? (3) Do institutional investors prefer analysts with bold attitude toward earnings forecast? Firstly, our empirical results show that institutional investors do pay attention to the accuracy of financial analysts earnings forecast. That is, firms with higher accuracy of analysts' earnings forecast tend to attract more institutional investors' attention and thus higher institutional holdings. Secondly, our results evidence that institutional investors prefer analysts with higher accuracy in their earnings forecast. That means institutional investors tend to follow more closely those analysts whose earnings forecasts are more accurate. Finally, we find that institutional investors in general are indifferent to the boldness of analysts earnings forecast. However, institutional investors will pay more attention and follow more closely those analysts whose earnings forecasts are not only accurate but also close to the consensus.

Download or read book The Characteristics of Individual Analysts Forecasts in Europe written by Guido Bolliger and published by . This book was released on 2001 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Team Earnings Forecasting written by Lawrence D. Brown and published by . This book was released on 2014 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: While brokerage houses use both teams of sell-side analysts and individual analysts to conduct earnings research, there is no empirical research examining if teams and individuals differ with regard to their forecasting performance or purpose, and if so, how and why. We first examine the most-often researched dimension of forecasting performance, earnings forecast accuracy, and we show that teams are less accurate than individual analysts in general and their own individual team members in particular. We conjecture that teams focus their efforts on an alternative dimension of forecasting performance, timeliness, and we show that team forecasts are timelier than those of individual analysts in general and their own individual team members in particular. Consistent with the notion that teams trade-off forecast accuracy for timeliness to comply with a market research demand, we show that team forecast revisions are associated with larger market responses than those of individuals. Finally, we shed light on the nature of team assignments by documenting that the firms teams follow are in greater financial distress (representing a greater need for timely information) and larger (representing a larger forecasting task).

Download or read book Analyst Information Production and the Timing of Annual Earnings Forecasts written by Sami Keskek and published by . This book was released on 2019 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate whether the reputation-herding theory or the tradeoff theory explains variation in the timing of individual analysts' forecasts. Using forecast accuracy improvements, forecast boldness, and the price impact of forecasts as measures of forecast quality, we find that in the information discovery phase that precedes an earnings announcement event, earlier forecasts have higher quality than later forecasts and find a similar pattern in the information analysis phase that begins with the earnings announcement date. Our findings suggest that consistent with the herding theory, more-capable analysts participate early in discovering and analyzing information and, therefore, earlier forecasts in the information discovery and analysis phases are of higher quality than later forecasts in that phase.

Download or read book Individual Differences and Analyst Forecast Accuracy written by Wenjuan Xie and published by . This book was released on 2013 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the impact of unidentifiable individual differences among financial analysts on the cross section of their earnings forecast accuracy. Various psychological factors, such as decision style and personality traits, are documented to impact individuals' decision making. However, analysts' individual differences in such psychological factors are not captured by identifiable personal attributes employed in finance literature, such as years of experience. In this paper, we employ the concept of analyst fixed effects to control for unidentifiable individual differences. Examining the factors related to forecast accuracy, we document that controlling for these unidentifiable analyst-specific effects improves model fitting, and changes the explanatory power of some of the traditionally used independent variables in the literature. We confirm that the analyst's firm-specific experience, the intensity of following that a firm receives, and the forecast horizon are all significantly and consistently related to forecast accuracy. However, we find that analyst general experience and coverage complexity lose explanatory power when individual differences are controlled for. Furthermore, we document that analyst general experience is not monotonically associated with better accuracy, and that analysts only benefit from increased general experience during the early to middle stages of their career. Finally, we observe that when analysts' individual differences are controlled for, the boldness of a forecast revision is no longer a significant determinant of the improvement of accuracy. This is one of the first studies to highlight the necessity of recognizing individual differences among financial analysts. We argue that this treatment advances the literature of analyst forecast performance, and closely relates financial agents' decision making to psychology theories of decision style and personality.

Download or read book Changes in Analysts Information Around Earnings Announcements written by Orie E. Barron and published by . This book was released on 2002 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study we examine changes in the precision and the commonality of information contained in individual analysts' earnings forecasts, focusing on changes around earnings announcements. Using the empirical proxies suggested by the Barron et al. (1998) model that are based on the across-analyst correlation in forecast errors, we find that the commonality of information among active analysts significantly decreases around earnings announcements. We also find that the idiosyncratic information contained in these individual analysts' forecasts increases significantly immediately after earnings announcements, and this increase is more significant as more analysts revise their forecasts. These results are consistent with theories positing that an important role of accounting releases is to trigger the generation of idiosyncratic information by elite information processors such as financial analysts (Kim and Verrecchia 1994, 1997).

Download or read book Using Analysts Earnings Forecasts for Country Industry Based Asset Allocation written by William Forbes and published by . This book was released on 2004 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we investigate the usefulness of analysts' earnings forecast revisions in the allocation of funds to different industries and countries. In particular, we ask whether a post analyst revision announcement drift in prices can be exploited to guide an asset allocation strategy based on industry, or country, selection. Using monthly consensus I/B/E/S-First Call analysts' earnings forecasts for companies listed on the main European stock markets over the period January 1987 to December 2001, we find a significant post revision announcement effect for individual companies. However, the abnormal returns evaporate away as we move from an individual company level to an industry or country level. We provide two kinds of evidence which seem to cast doubt on the analysts' ability to fully incorporate industry and country specific information into their forecasts. First, we show that returns are driven more by common components than earnings forecast revisions. Second, we find that company specific news reflected by the revision signal dominates industry or country news.

Download or read book An Empirical Study of Financial Analysts Earnings Forecast Accuracy written by Andrew Stotz and published by . This book was released on 2017 with total page 122 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past 12 years, financial analysts across the world have been optimistically wrong with their 12-month earnings forecasts by 25.3%. This study may be the first of its kind to assess analyst earnings forecast accuracy at all listed companies across the globe, covering 70 countries. A review of prior research shows little uniformity in the preparation of the data set, yet differences in how outliers are treated, for example, can create substantially different results. This research lays out six specific steps to prepare the data set before any analysis is done.Three main conclusions come from this research: First, analyst earnings forecasts globally were 25.3% optimistically wrong, meaning on average, analysts started each year forecasting company profits of US$125, but 12 months later that company reported profits of US$100. Second, analysts had a harder time forecasting earnings for companies in emerging markets, where they were 35% optimistically wrong. Third, that analyst optimism mainly occurred when the companies they forecasted experienced very low levels of actual earnings growth, analysts did not make an equal, but opposite error for fast growth companies.