Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If You Use a Screen Reader

This content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.

Individual-Analyst Characteristics and Forecast Error

Hiromichi Tamura
Financial Analysts Journal
Vol. 58, No. 4 (Jul. - Aug., 2002), pp. 28-35
Published by: CFA Institute
Stable URL: http://www.jstor.org/stable/4480404
Page Count: 8
  • Read Online (Free)
  • Subscribe ($19.50)
  • Cite this Item
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Individual-Analyst Characteristics and Forecast Error
Preview not available

Abstract

The purpose of the study reported here 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 between an analyst's behavior and that analyst's characteristics is not clear, however, because most previous work was based solely on consensus estimates. By using detailed historical data, I found a stronger serial correlation among the herd-to-consensus analysts (that is, the group with a small average distance between their forecasts and the consensus forecast) than among other analysts. Moreover, average distance to consensus itself has a positive serial correlation, and it may be attributed to an analyst's personality (optimistic or pessimistic). I found strong positive serial correlation in the average distance to consensus among the herd-to-consensus analysts. These results show that herd-to-consensus analysts submit earnings estimates that are not only close to the consensus but are also strongly affected by their personalities.

Page Thumbnails

  • Thumbnail: Page 
28
    28
  • Thumbnail: Page 
29
    29
  • Thumbnail: Page 
30
    30
  • Thumbnail: Page 
31
    31
  • Thumbnail: Page 
32
    32
  • Thumbnail: Page 
33
    33
  • Thumbnail: Page 
34
    34
  • Thumbnail: Page 
35
    35