Analysts' accuracy following an increase in uncertainty: Evidence from the art market

41 Pages Posted: 30 Jan 2023 Last revised: 20 Feb 2024

See all articles by Spencer Barnes

Spencer Barnes

The University of Texas at El Paso

Brandon Mendez

University of South Carolina

Andrew Schrowang

Florida State University - Department of Finance

Date Written: March 25, 2020

Abstract

This study utilizes the art market as an exogenous setting to explore how an increase in price uncertainty (i.e., the death of an artist) impacts the accuracy and forecast error of analysts' estimates. We find that in the year following an artist's death, analysts' accuracy decreases by 14% and their forecast error increases by 11%. Additional analysis indicates that the effect is due to a decrease in the estimation range, an increase in the forecast bias of analysts, and an increase in the price volatility of the artwork. These findings suggest that analysts perform poorly following an increase in uncertainty which is pertinent for asset markets.

Keywords: Price Uncertainty, Alternative Assets, Cultural Finance

JEL Classification: G11, G14, Z11

Suggested Citation

Barnes, Spencer and Mendez, Brandon and Schrowang, Andrew, Analysts' accuracy following an increase in uncertainty: Evidence from the art market (March 25, 2020). Available at SSRN: https://ssrn.com/abstract=4337085 or http://dx.doi.org/10.2139/ssrn.4337085

Spencer Barnes (Contact Author)

The University of Texas at El Paso ( email )

500 West University Avenue
El Paso, TX 79968
United States

HOME PAGE: http://sites.google.com/view/spencer-barnes

Brandon Mendez

University of South Carolina ( email )

1014 Greene Street
Columbia, SC 29208
United States

Andrew Schrowang

Florida State University - Department of Finance ( email )

821 Academic Way, RBA 311
P.O. Box 3061110
Tallahassee, FL 32306-1042
United States

HOME PAGE: http://sites.google.com/view/andrew-schrowang/home

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