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International Advances in Economic Research

, Volume 5, Issue 1, pp 56–64 | Cite as

An international comparison of analysis' earnings forecast accuracy

  • Michael Firth
  • Michael Gift
Articles

Abstract

A major task of financial analysts working for stockbrokers and investment firms is to forecast future earnings of listed companies. The usefulness of their work crucially depends on the accuracy of the forecasts. A great many studies have examined the accuracy, bias, and other characteristics of profit forecasts made in the U.S. In contrast, however, there is very little research on forecasting accuracy in other countries despite the increasingly global nature of investing. This paper examines the accuracy of corporate earnings forecasts in 34 different countries. In addition, a model is developed that seeks to explain differences across companies and countries. The findings show that eight countries have better forecast accuracy than the U.S. This cross-sectional model shows that with the inherent difficulty in forecasting for a specific company (proxied by the change in its earnings), risk and the number of analysts following the stock are the major factors in explaining earnings forecast accuracy.

Keywords

Economic Growth International Economic International Comparison Forecast Accuracy Earning Forecast 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© International Atlantic Economic Society 1999

Authors and Affiliations

  • Michael Firth
    • 1
  • Michael Gift
    • 2
  1. 1.Hong Kong Polytechnic UniversityHong Kong
  2. 2.Lingnan CollegeHong Kong

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