Long-Horizon Forecasts

57 Pages Posted: 12 Jun 2019 Last revised: 24 Dec 2020

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: December 23, 2020

Abstract

We study security analysts’ production of long-horizon forecasts. While forecasts produced early in the horizon schedule have the potential to be the most helpful to clients, and these forecasts make up a nontrivial portion of analysts’ forecast production, prior literature essentially ignores the drivers and implications of long-horizon forecasts. We find that long-horizon forecast production is more common among analysts with lower reputation and less workload, and when analysts are initiating coverage. Additionally, long-horizon forecast production is higher for firms held by investors with longer investing horizons and firms that derive more of their value from distant cash flows. Analysts who issue long-horizon forecasts have a greater ability to affect prices, have better career outcomes, and are more likely to be voted all-stars.

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 (December 23, 2020). 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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