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A Study of Analyst Forecast Reliability in Australia

Journal of Applied Research in Accounting and Finance (JARAF), Vol. 8, No. 2, 2013

25 Pages Posted: 9 Jan 2014  

Alina Maydybura

University of Wollongong - School of Accounting, Economics & Finance

Dionigi Gerace

The University of Sydney

Brian Andrew

University of Wollongong - School of Accounting, Economics & Finance

Date Written: 2013

Abstract

The purpose of this paper is to determine whether time weighted consensus estimates offer a more effective method for predicting company actual EPS figures than simple mean or median analysis. The study aims to construct a more comprehensive earnings forecast signal using analyst earnings forecasts that have been weighted based on the timeliness of updates. Aimed at extracting valuable information from timely analyst forecasts, the time weighted earnings signal (TWES) methodology allows extracting valuable information from analysts who possess some unique insights about the market and issue their updates more frequently. One would expect the time signal to reflect a more realistic representation of analyst estimate changes and thus be more effective in predicting the companies’ reported EPS than the mean and median.

Keywords: Accounting, Finance

JEL Classification: M40, M41

Suggested Citation

Maydybura, Alina and Gerace, Dionigi and Andrew, Brian, A Study of Analyst Forecast Reliability in Australia (2013). Journal of Applied Research in Accounting and Finance (JARAF), Vol. 8, No. 2, 2013. Available at SSRN: https://ssrn.com/abstract=2376039

Alina Maydybura

University of Wollongong - School of Accounting, Economics & Finance ( email )

Northfields Avenue
Wollongong, NSW 2522
Australia

Dionigi Gerace (Contact Author)

The University of Sydney ( email )

University of Sydney
Sydney, NC NSW 2006
Australia

Brian Andrew

University of Wollongong - School of Accounting, Economics & Finance ( email )

Northfields Avenue
Wollongong, NSW 2522
Australia

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