International Differences in Analyst Forecast Properties
57 Pages Posted: 2 Jul 2001
Date Written: undated
This paper examines international differences in analyst forecast properties using 42 countries. Properties of the forecasts, specifically dispersion and error, are hypothesized to be a function of country-specific, firm-specific, and discretionary components, the latter component including analyst bias and management manipulation of their firm's information environment. The results suggest that country-specific (e.g., corporate governance structures) and firm-specific (e.g., size) components help determine dispersion and error. The most important component, however, appears to be the discretionary component, as analyzed by profitability. Firms with losses are associated with significantly higher dispersion and error and overwhelming percentages of forecast optimism.
Keywords: Analyst forecasts, transparency, corporate governance
JEL Classification: D80, F30, G24, G29, M41
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