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| Author: | Tamura, H. |
| Title: | Individual-analyst characteristics and forecast error |
| Journal: | Financial Analysts' Journal
2002 : JUL/AUG, VOL. 58:4, p. 28-35 |
| Index terms: | Forecasting Investment Service Statistical methods USA |
| Freeterms: | Analysts |
| Language: | eng |
| Abstract: | This study's purpose was to investigate how characteristics of analysts affect their forecast errors. Previous research has found positive serial correlation in forecast errors, which can be attributed to underreaction to new information, especially to bad news. The relationship btw. an analyst's behaviour and that analyst's characteristics is not clear. By using detailed historical data, this study found a stronger serial correlation among the herd-to-consensus (h-to-c) analysts than among other analysts. In addition, average distance to consensus itself has a positive serial correlation, and it may be attributed to an analyst's personality (optimistic or pessimistic). This stydy found strong positive serial correlation in the average distance to consensus among the h-to-c analysts. These results show that h-to-c analysts submit earnings estimates that are not only close to the consensus but are also strongly affected by their personalities. |
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