Long-Horizon Forecasts

55 Pages Posted: 12 Jun 2019 Last revised: 21 Mar 2022

See all articles by Vadim S. Balashov

Vadim S. Balashov

Rutgers School of Business-Camden

Kevin Pisciotta

University of Kansas - School of Business

Date Written: March 20, 2022


Why do some analysts reveal their long-horizon forecasts, while many other analysts do not? We argue that analysts reveal their long-horizon forecasts to generate publicity and we find evidence consistent with this hypothesis. Analysts that work for smaller, less prestigious brokerages, where a larger fraction of revenue comes from trading fees and publicity incentives are high, are more likely to reveal their long-horizon forecasts. We also show, using a relatively novel sample of crowd-sourced forecasts, that sell-side analysts are much more likely to issue long-horizon forecasts than buy-side analysts, which is consistent with sell-side analysts using long-horizon forecasts to attract clients. Additionally, variation in the expected rewards from publicity across portfolio firms and analysts also affects the decision of when to reveal long-horizon forecasts. Lastly, we show that revealing long-horizon forecasts affects analysts' careers. Consistent with analysts internalizing their employer's publicity incentives and using long-horizon forecasts to generate publicity, analysts that issue long-horizon forecasts and work for brokerages that value publicity experience lower job termination risk and larger investor responses to their future research, but also experience a lower probability of being promoted to a top brokerage.

Keywords: Analyst Forecasts; Analyst Career Outcomes; Forecast Accuracy; Forecast Horizon; Sell-Side Analysts

JEL Classification: G11, G14, G24, M41

Suggested Citation

Balashov, Vadim S. and Pisciotta, Kevin, Long-Horizon Forecasts (March 20, 2022). Available at SSRN: https://ssrn.com/abstract=3394317 or http://dx.doi.org/10.2139/ssrn.3394317

Vadim S. Balashov (Contact Author)

Rutgers School of Business-Camden ( email )

Camden, NJ 08102
United States
856-225-6706 (Phone)

Kevin Pisciotta

University of Kansas - School of Business ( email )

Capital Federal Hall
1654 Naismith Dr
Lawrence, KS 66045
United States

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