Local Analyst Earnings Forecast Advantages in Europe

69 Pages Posted: 9 Mar 2004

See all articles by Steven F. Orpurt

Steven F. Orpurt

Arizona State University; Singapore Management University

Date Written: February 22, 2004

Abstract

This study investigates local analyst earnings forecast advantages in Europe. Information asymmetries or different incentives may drive hypothesized local advantages. Statistically significant, but not overwhelming, evidence indicates that local analysts forecast earnings more accurately than non-local analysts. Leader and follower tests support the observation that local analysts issue timelier forecasts. Accuracy results are driven in part by the German sample and may be attributable to the DVFA/SG earnings adjustment process used by analysts. U.K. (London) based analysts are less accurate forecasters. The magnitude of the local forecast advantage is large enough to be economically interesting, particularly in Germany. The findings support the existence of geographic information asymmetries and support explanations for home equity bias.

Keywords: Analyst earnings forecasts, international, information asymmetry, home equity bias

JEL Classification: F39, G24, M41, N24

Suggested Citation

Orpurt, Steven F., Local Analyst Earnings Forecast Advantages in Europe (February 22, 2004). Available at SSRN: https://ssrn.com/abstract=515723 or http://dx.doi.org/10.2139/ssrn.515723

Steven F. Orpurt (Contact Author)

Arizona State University ( email )

300 Lemon Street
PO Box 873606
Tempe, AZ 85287-3606
United States
480 965 2393 (Phone)

Singapore Management University ( email )

Li Ka Shing Library
70 Stamford Road
Singapore 178901, 178899
Singapore

Register to save articles to
your library

Register

Paper statistics

Downloads
546
Abstract Views
2,675
rank
49,528
PlumX Metrics