Predictive properties of analysts' forecasts of corporate earnings.

Mid-Atlantic Journal of Business, March, 1993 by Calderon, Thomas G.

The predictive properties of forecasts made by financial analysts of corporate earnings during the years 1976-1988 are examined for accuracy and directional bias. Analysts' forecasts are found to be good indicators of whether corporate earnings will rise or fall. However, they generally overestimate realized earnings and this systematic upward bias is not offset by known historical information.

I. INTRODUCTION

Earnings forecasts receive a considerable amount of attention by both academics and business professionals. This extraordinary attention arises from the widespread use of earnings expectations data in several academic and professional applications. For example, earnings expectations data are used in market based research, security valuation, financial...