Model-Based Earnings Forecasts vs. Financial Analysts’ Earnings Forecasts
Wang, P; Harris, R
Date: 10 October 2018
Journal
British Accounting Review
Publisher
Elsevier
Publisher DOI
Abstract
Existing accounting-based forecasting models of earnings either do not fully consider information that is contained in stock prices or use an ad hoc specification that is not based on rigorous valuation theory. In this paper, we develop an earnings forecasting model built on the theoretical linkages between future earnings and stock ...
Existing accounting-based forecasting models of earnings either do not fully consider information that is contained in stock prices or use an ad hoc specification that is not based on rigorous valuation theory. In this paper, we develop an earnings forecasting model built on the theoretical linkages between future earnings and stock prices as well as a number of accounting fundamental variables. We find that our model-based forecasts of earnings are in general less biased and more accurate than both existing model-based forecasts and analysts' consensus forecasts, at both shorter and longer horizons. We also show that the accuracy of both model-based forecasts and financial analysts' forecasts depend on firm-specific characteristics such as firm size and industry membership.
Finance and Accounting
Faculty of Environment, Science and Economy
Item views 0
Full item downloads 0
Related items
Showing items related by title, author, creator and subject.
-
A methodology for probabilistic real-time forecasting – an urban case study
Rene, Jeanne-Rose; Madsen, Henrik; Mark, Ole (IWA Publishing, 19 December 2012)The phenomenon of urban flooding due to rainfall exceeding the design capacity of drainage systems is a global problem and can have significant economic and social consequences. The complex nature of quantitative precipitation ... -
Parameter uncertainty in forecast recalibration
Siegert, S; Sansom, PG; Williams, R (Wiley / Royal Meteorological Society, 9 February 2016)Ensemble forecasts of weather and climate are subject to systematic biases in the ensemble mean and variance, leading to inaccurate estimates of the forecast mean and variance. To address these biases, ensemble forecasts ... -
Proper scoring rules for interval probabilistic forecasts
Mitchell, K; Ferro, CAT (Wiley / Royal Meteorological Society, 18 May 2017)Interval probabilistic forecasts for a binary event are forecasts issued as a range of probabilities for the occurrence of the event, for example, ‘chance of rain: 10-20%’. To verify interval probabilistic forecasts, use ...