Analysts’ Annual Earnings Forecasts and Changes to the I/B/E/S Database

61 Pages Posted: 3 Jun 2016 Last revised: 29 Jan 2020

See all articles by Andrew C. Call

Andrew C. Call

Arizona State University (ASU) - School of Accountancy

Max Hewitt

University of Arizona - Eller College of Management

Jessica Watkins

University of Notre Dame

Teri Lombardi Yohn

Emory University Goizueta Business School

Date Written: January 3, 2020

Abstract

I/B/E/S is a common source of analyst earnings forecast data, and the reliability of these data is important for practice and academic research. Examining a common sample period, we compare annual earnings forecasts across two versions of the I/B/E/S detail file, one made available in 2009 and the other made available in 2015. We find substantial differences in the contents of these two versions of the detail file, as well as significant differences in the attributes of the earnings forecasts available in each version. Specifically, the earnings forecasts in the more recent version are more accurate and less biased, and they identify substantially different firms as meeting or just beating analysts’ expectations than those in the older version. To highlight the potential impact of these differences, we show that the economic magnitude of the effects of analyst experience and brokerage size on earnings forecast accuracy change by over 30 percent when we use the more recent version instead of the older version. Additional analyses suggest that the differences across versions of the detail file are ongoing. In contrast, we find that different versions of the summary file exhibit only minor differences over time. We also find significant differences in the properties of consensus earnings forecasts calculated from the individual earnings forecasts available in the detail file and consensus earnings estimates from the summary file. Finally, we provide guidance to researchers using I/B/E/S for analyst earnings forecast data.

Keywords: I/B/E/S, Analysts, Earnings forecasts, Consensus, Market expectations

JEL Classification: M41

Suggested Citation

Call, Andrew C. and Hewitt, Max and Watkins, Jessica and Yohn, Teri Lombardi, Analysts’ Annual Earnings Forecasts and Changes to the I/B/E/S Database (January 3, 2020). Available at SSRN: https://ssrn.com/abstract=2788140 or http://dx.doi.org/10.2139/ssrn.2788140

Andrew C. Call

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

Max Hewitt

University of Arizona - Eller College of Management ( email )

School of Accountancy
1130 E. Helen Street
Tucson, AZ 85721
United States
(520) 621-4805 (Phone)

Jessica Watkins

University of Notre Dame ( email )

384 Mendoza College of Business
Notre Dame, IN 46656
United States

Teri Lombardi Yohn (Contact Author)

Emory University Goizueta Business School ( email )

201 Dowman Drive
Atlanta, GA 30322
United States

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