Buy-Side vs. Sell-Side Analysts' Earnings Forecasts
Posted: 24 Sep 2008
Date Written: September, 23 2008
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
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