Analyst Forecast Consistency

44 Pages Posted: 20 Jan 2012  

Gilles Hilary

Georgetown University - Department of Accounting and Business Law

Charles Hsu

Hong Kong University of Science & Technology

Multiple version iconThere are 2 versions of this paper

Date Written: January 20, 2012

Abstract

We show empirically that analysts who display more consistent forecast errors have greater ability to affect prices, and that this effect is larger than that of stated accuracy. These results lead to three implications. First, consistent analysts are less likely to be demoted and are more likely to be nominated All Star analysts. Second, analysts strategically deliver downward-biased forecasts to increase their consistency (if at the expense of stated accuracy). Finally, the benefits of consistency and of “lowballing” (accuracy) are increasing (decreasing) in institutional investors’ presence.

Keywords: analyst forecast, consistency, Reg FD

JEL Classification: M4, G2

Suggested Citation

Hilary, Gilles and Hsu, Charles, Analyst Forecast Consistency (January 20, 2012). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1988919

Gilles Hilary (Contact Author)

Georgetown University - Department of Accounting and Business Law ( email )

McDonough School of Business
Washington, DC 20057
United States

Charles Hsu

Hong Kong University of Science & Technology ( email )

Hong Kong
Hong Kong
852-2358-7568 (Phone)
852-2358-1693 (Fax)

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