Long-Horizon Forecasts

59 Pages Posted: 25 Jul 2023

See all articles by Vadim S. Balashov

Vadim S. Balashov

Rutgers School of Business-Camden

Kevin Pisciotta

University of Kansas - School of Business

Multiple version iconThere are 2 versions of this paper

Abstract

Why do some analysts reveal their long-horizon forecasts, while many others do not? We propose an accuracy-publicity tradeoff to explain analysts' long-horizon forecast decisions, and we find evidence consistent with this hypothesis. Analysts who work for smaller brokerages, where a larger fraction of revenue comes from trading fees, are more likely to reveal their long-horizon forecasts. Using a relatively novel sample of crowd-sourced forecasts, we also show that sell-side analysts are much more likely to issue long-horizon forecasts than buy-side analysts, consistent with sell-side analysts using long-horizon forecasts to attract new clients. Variation in the expected rewards from publicity across portfolio firms and analysts also affects analysts' long-horizon forecast decisions. Last, we show that revealing long-horizon forecasts affects analysts' careers. Analysts who issue long-horizon forecasts and work for brokerages that value publicity are less likely to lose their job, but are also less likely to move to a top brokerage.

Keywords: Analyst Forecasts, Analyst Career Outcomes, Publicity Incentives, Forecast Horizon, sell-side analysts

Suggested Citation

Balashov, Vadim S. and Pisciotta, Kevin, Long-Horizon Forecasts. Available at SSRN: https://ssrn.com/abstract=4520802 or http://dx.doi.org/10.2139/ssrn.4520802

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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