Target Price Accuracy: International Evidence

Posted: 23 Aug 2011 Last revised: 25 Jan 2013

See all articles by Pawel Bilinski

Pawel Bilinski

City University London - Sir John Cass Business School

Danielle Lyssimachou

City University London - Sir John Cass Business School; University of Manchester - Division of Accounting and Finance

Martin Walker

University of Manchester - Manchester Business School

Date Written: August 23, 2011

Abstract

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

Bilinski, Pawel and Lyssimachou, Danielle and Walker, Martin, Target Price Accuracy: International Evidence (August 23, 2011). The Accounting Review, VOLUME 88, No. 3 May 2013, Available at SSRN: https://ssrn.com/abstract=1915082 or http://dx.doi.org/10.2139/ssrn.1915082

Pawel Bilinski (Contact Author)

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Danielle Lyssimachou

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

University of Manchester - Division of Accounting and Finance ( email )

Crawford House
Oxford Road
Manchester, M13 9PL
United Kingdom

Martin Walker

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

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