Target Price Accuracy: International Evidence
Posted: 23 Aug 2011 Last revised: 25 Jan 2013
Date Written: August 23, 2011
Using an international sample of 16 countries, this paper examines if analyst- and country-specific characteristics explain the variation in target price (TP) accuracy. We find significant variation in average TP accuracy across countries that is due to differences in accounting disclosure quality, the origin of the legal system, cultural traits and IFRS regulation. We also find that analysts exhibit differential and persistent ability to forecast target prices accurately, which confirms that some analysts have superior TP forecasting ability.
Keywords: target prices, forecast accuracy, analyst characteristics, institutional and regulatory differences across countries
JEL Classification: G11, G12, G14
Suggested Citation: Suggested Citation