Title

An international comparison of analysts' earnings forecast accuracy

Document Type

Journal article

Source Publication

International Advances in Economic Research

Publication Date

2-1-1999

Volume

5

Issue

1

First Page

56

Last Page

64

Abstract

A major task of financial analysts working for stockbrokers and investment firms is to forecast future earnings of listed companies. The usefulness of their work crucially depends on the accuracy of the forecasts. A great many studies have examined the accuracy, bias, and other characteristics of profit forecasts made in the U.S. In contrast, however, there is very little research on forecasting accuracy in other countries despite the increasingly global nature of investing. This paper examines the accuracy of corporate earnings forecasts in 34 different countries. In addition, a model is developed that seeks to explain differences across companies and countries. The findings show that eight countries have better forecast accuracy than the U. S. This cross-sectional model shows that with the inherent difficulty in forecasting for a specific company (proxied by the change in its earnings), risk and the number of analysts following the stock are the major factors in explaining earnings forecast accuracy. (JEL G24, M41).

DOI

10.1007/BF02295031

Print ISSN

10830898

E-ISSN

1573966X

Publisher Statement

Copyright © 1999 International Advances in Economic Research (IAER)

Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Recommended Citation

Firth, M., & Gift, M. (1999). An international comparison of analysts' earnings forecast accuracy. International Advances in Economic Research, 5(1), 56-64. doi: 10.1007/BF02295031