Earnings forecast errors: Comparative evidence from the Pacific-Basin capital markets

Allen, Arthur C.; Cho, Jang Youn; Jung, Kooyul

doi:10.1016/s0927-538x(96)00021-2

Cited by 22 publications

(18 citation statements)

References 12 publications

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“…This result contradicts international evidence that management of IPOs are typically over-optimistic in their earning forecast. In addition, it is consistent with Allen et al (1997), who report that profits are frequently adjusted upward if they are expected to fall below forecast, but rarely drift down if the forecast is exceeded.…”

Section: A Descriptive Statisticssupporting

confidence: 86%

Associations Between Management Forecast Accuracy and Pricing of IPOs in Athens Stock Exchange

Gounopoulos

2011

MFJ

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This study examines the earnings forecast accuracy of newly listed companies on the Athens Stock Exchange and further investigates the relationship between earnings forecast and pricing of IPOs. It uses a unique data set of 208 IPOs, which were floated during the period of January 1994 to December 2001 in the Athens Stock Exchange. The results suggest that investors are able to anticipate forecast errors at the time of listing. Pricing of IPOs indicate that firms with negative earnings forecast (pessimistic) are associated with low level of underpricing while optimistic management earning forecast can be a signal for high initial returns. Three variables -age of the IPOs, ownership by insiders and industry classification significantly contribute towards accuracy of earnings forecast.

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Section: A Descriptive Statisticssupporting

confidence: 86%

Associations Between Management Forecast Accuracy and Pricing of IPOs in Athens Stock Exchange

Gounopoulos

2011

MFJ

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“…On the international analyst forecast side, Firth and Gift (1999) compare the precision of consensus analyst forecasts across countries and find that estimates are more precise for eight countries compared to the U.S. consensus estimates. Allen et al, (1997) find differences in forecast errors between Pacific Basin markets and more developed capital markets. Ang and Ma (2001) document that analysts failed to anticipate the Asian financial crisis.…”

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confidence: 81%

Properties of Individual Analysts’ Earnings Forecasts for the Turkish Stock Market

Aydo¹,

Sarao²

2005

boun

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We examine the properties of individual analysts' forecasts of annual earnings for Turkish companies. Using a sample obtained from the Institutional Brokers Estimate System (I/B/E/S) database of earnings forecasts, we measure individual analysts' forecast errors and relative optimism, and test for serial correlation in these measures. We also compare the forecast accuracy of analysts working for Turkish brokerage firms to the forecast accuracy of those employed by non-Turkish firms. An important contribution of this paper is that it is the first study to focus on the earnings forecasts of Turkish companies at the individual analyst level.The past decade has seen substantial growth in emerging markets as investors seeking high returns and potential diversification benefits have channeled their funds into assets in these markets. Turkey, which is identified as a big emerging market by the U.S. Department of Treasury (see Business America, 1994), has enjoyed substantial growth in its equity market since the inception of the Istanbul Stock Exchange (ISE) in 1986. Sustained growth in the Turkish equity market and its integration with the world capital markets require the availability of timely and accurate information on company performance. Security analysts' forecasts of company earnings are an integral part of the information set for equity investors. The role of analysts' earnings forecasts as a representative of the market's earnings expectations is well documented in the literature (see Brown, 1978;Fried and Givoly, 1982;Rendleman et al., 1982;and Brown et al., 1987). Also, analyst following is a good indicator of interest in and potential growth of an equity market. Figure 1 shows the number of Turkish companies for which analysts reported earnings forecasts to the Institutional Brokers Estimate System (I/B/E/S) for each year during the 1994-2001 period. As is apparent in Figure 1, there was a significant increase in the number of Turkish companies followed by analysts, which can be interpreted as a sign of increased interest in the Turkish equity market.There is a rich body of research that focuses on the characteristics of individual analysts' earnings forecasts. Tamura (2002) studies the properties of individual analyst forecasts and finds that an analyst's forecast tends to be influenced by her personality. Cooper et al., (2001) rank individual analyst forecasts and conclude that lead analyst forecasts tend to impact the markets more than the follower analyst forecasts do. On the international analyst forecast side, Firth and Gift (1999) compare the precision of consensus analyst forecasts across countries and find that estimates are more precise for eight countries compared to the U.S. consensus estimates. Allen et al., (1997) find differences in forecast errors between Pacific Basin markets and more developed capital markets. Ang and Ma (2001) document that analysts failed to anticipate the Asian financial crisis. De Bondt and Forbes (1999) find evidence for herding behavior among U.K. analysts....

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“…À titre de comparaison, les R 2 obtenus dans les études portant sur l'explication des erreurs de prévision des analystes par divers facteurs (Allen et al, 1997;Loh et Mian, 2003) oscillent entre 5 et 7 %. Hope (2003) obtient des R 2 ajustés comparables au nôtre si les effets spécifiques à la firme sont pris en considération.…”

Section: Première éTape : Estimation Des Effets « Pays » « Secteur »unclassified

“…Citons entre autres Allen et al (1997), Higgins (1998), Chang et al (2000), Capstaff et al (2001), Black et Carnes (2002) et Coën et Desfleurs (2004).…”

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La précision des analystes financiers en Europe : l’effet pays et l’effet secteur revisités

Coën

Desfleurs

2011

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Earnings forecast errors: Comparative evidence from the Pacific-Basin capital markets

Cited by 22 publications

References 12 publications

Associations Between Management Forecast Accuracy and Pricing of IPOs in Athens Stock Exchange

Associations Between Management Forecast Accuracy and Pricing of IPOs in Athens Stock Exchange

Properties of Individual Analysts’ Earnings Forecasts for the Turkish Stock Market

La précision des analystes financiers en Europe : l’effet pays et l’effet secteur revisités

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