Accuracy, usefulness and the evaluation of analysts’ forecasts

This paper provides evidence that forecast immediacy (FI), which is the speed with which analysts respond to a significant change in the publicly available information set, is an ex-ante determinant of analysts’ forecast properties. Specifically, the greater the FI the less accurate analysts’ foreca...

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Bibliographic Details
Published inInternational journal of forecasting Vol. 19; no. 3; pp. 417 - 434
Main Author Mozes, Haim A.
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.07.2003
Elsevier
Elsevier Sequoia S.A
SeriesInternational Journal of Forecasting
Subjects
Accuracy
Earnings
Earnings forecasting
Economic models
Evaluating forecasts
Forecasting
Studies
Earnings forecasting
Evaluating forecasts
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Summary:This paper provides evidence that forecast immediacy (FI), which is the speed with which analysts respond to a significant change in the publicly available information set, is an ex-ante determinant of analysts’ forecast properties. Specifically, the greater the FI the less accurate analysts’ forecasts and the greater the dispersion in analysts’ forecasts. Conversely, FI is positively related to forecast usefulness, which is the extent to which the forecast improves upon the accuracy of existing forecasts. One implication of these results is that it may be appropriate to evaluate separately analysts whose forecasts tend to have high FI and analysts whose forecasts tend to have low FI. A second implication is that, to the extent that forecasts with high FI tend to be more accurate than prior forecasts, one might place less weight on forecasts that precede high FI forecasts.
ISSN:0169-2070
1872-8200
DOI:10.1016/S0169-2070(02)00056-0