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Analysts' Forecasts and the Broker Relationship
Author(s) -
Hodgkinson Lynn
Publication year - 2001
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/1468-5957.00399
Subject(s) - earnings , agency (philosophy) , consensus forecast , economics , subject (documents) , econometrics , forecast error , actuarial science , financial economics , business , accounting , computer science , philosophy , epistemology , library science
Analysts' ability to forecast earnings per share has been the subject of considerable debate. A concern highlighted in previous research is the agency problem which may arise when analysts have a close working relationship with the firms for which they are providing forecasts. This paper provides evidence that this relationship does not improve the accuracy of the earnings forecasts, but stimulates optimistic forecasts. In addition, the paper examines whether firm size is a factor in forecast accuracy or bias.