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On the Performance of Naïve, Analyst and Composite Earnings Forecasts: Evidence from Hong Kong
Author(s) -
Cheng Joseph W.,
Fan Dennis K.,
So Raymond W.
Publication year - 2003
Publication title -
journal of international financial management and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.818
H-Index - 37
eISSN - 1467-646X
pISSN - 0954-1314
DOI - 10.1111/1467-646x.00093
Subject(s) - earnings , empirical evidence , econometrics , measure (data warehouse) , accounting , economics , business , financial economics , computer science , database , philosophy , epistemology
In this paper, we compare the information content and performance of naïve, analyst and composite forecasts in Hong Kong. Empirical evidence shows that superior performance can be obtained by a composite measure combining both analyst and naïve forecasts. In addition, analyst forecasts become more conditionally efficient over the naïve model as the actual announcement approaches. The superiority and timing advantage of analyst forecasts suggest that more emphasis should be placed on the services of analysts for predicting future earnings figures, particularly when the announcement is approaching.