What question did this study set out to answer?

This research aims to determine if differences exist in the earnings forecast accuracy of financial analysts by addressing previous methodological shortcomings.

March 1, 1997Contemporary Accounting ResearchOpen Access

A Re‐Examination of Financial Analysts' Differential Earnings Forecast Accuracy*

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Authors

PSPraveen SinhaCalifornia State University, Long Beach LBLawrence D. BrownColumbia University SDSomnath DasUniversity of Illinois Chicago

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Implication

Randomized trial examines forecast accuracy in financial analysts, suggesting some are consistently better than others.

Key Points

This research aims to determine if differences exist in the earnings forecast accuracy of financial analysts by addressing previous methodological shortcomings.
Utilized estimated generalized least squares estimation procedure to control for forecast recency effects.
Employed a matched-pair design comparing analysts' forecast errors on same firms.
Analyzed estimation samples of one to four years to validate the forecast accuracy persistence.
Differential forecast accuracy exists among analysts, especially with forecast horizons of five and 60 trading days.
Analysts identified as 'superior' in estimation samples maintained their status in holdout periods, while 'inferior' analysts did not.
The findings suggest that capital markets differentiate between analysts, influencing stock price formulation.

Cite This Study

Sinha et al. (1997) studied this question.

synapsesocial.com/papers/6a6b867a79eb7ca1702462ce https://doi.org/10.1111/j.1911-3846.1997.tb00518.x

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A Re‐Examination of Financial Analysts' Differential Earnings Forecast Accuracy*

Discussion

Member takes

Implication

Key Points

Cite This Study

A Re‐Examination of Financial Analysts' Differential Earnings Forecast Accuracy*

Discussion

Member takes

Implication

Key Points

Cite This Study

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