Analyst Forecasting Errors: Additional Evidence

Key Points

• This research examines the accuracy of analyst forecasts and the presence of optimistic bias over time.
• Analyzed historical data on analyst forecasting errors from 1985 to 1996.
• Compared errors across different firms based on market capitalization and industry types.
• Forecasting errors showed a decreasing trend from 1985 to 1996.
• S&P 500 firms had smaller forecasting errors compared to other firms, with a notable absence of optimistic bias from 1993 to 1996.
• Larger firms with more analyst coverage demonstrated smaller errors in forecasts.