Buy-Side vs. Sell-Side Analysts' Earnings Forecasts

Posted: 24 Sep 2008

See all articles by Boris Groysberg

Boris Groysberg

Harvard Business School

Paul M. Healy

Harvard Business School; National Bureau of Economic Research (NBER)

Craig J. Chapman

Northwestern University - Kellogg School of Management

Date Written: September, 23 2008

Abstract

The study reported here is a comparison of the earnings-forecasting performance of analysts at a large buy-side firm with the performance of sell-side analysts in the 1997-2004 period. The tests show that the buy-side analysts made more optimistic and less accurate forecasts than their counterparts on the sell side. The performance differences appear to be partially explained by the buy-side firm's greater retention of poorly performing analysts and by differences in the performance benchmarks used to evaluate buy-side and sell-side analysts.

Keywords: Equity Investments, Fundamental Analysis and Valuation Models, Performance Measurement and Evaluation, Performance Measurement, Investment Industry, Structure, Organization, and Demographics, Firm Management, Adapting to Change

Suggested Citation

Groysberg, Boris and Healy, Paul M. and Chapman, Craig J., Buy-Side vs. Sell-Side Analysts' Earnings Forecasts (September, 23 2008). Financial Analysts Journal, Vol. 64, No. 4, 2008, Available at SSRN: https://ssrn.com/abstract=1272504

Boris Groysberg (Contact Author)

Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
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617-496-2784 (Phone)
617-496-5271 (Fax)

Paul M. Healy

Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-1283 (Phone)
617-496-7387 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Craig J. Chapman

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Jacobs Center 6227
Evanston, IL 60208
United States
8474912662 (Phone)
8474671202 (Fax)

HOME PAGE: http://www.kellogg.northwestern.edu

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