The inefficiency of the mean analyst forecast as a summary forecast of earnings

Authors
Kim, O Lim, SC Shaw, KW
Citation
O. Kim et al., The inefficiency of the mean analyst forecast as a summary forecast of earnings, J ACCOUNTIN, 39(2), 2001, pp. 329-335
Citations number
12
Categorie Soggetti
Economics
Journal title
JOURNAL OF ACCOUNTING RESEARCH
ISSN journal
00218456 → ACNP
Volume
39
Issue
2
Year of publication
2001
Pages
329 - 335
Database
ISI
SICI code
0021-8456(200109)39:2<329:TIOTMA>2.0.ZU;2-S
Abstract
We show analytically that mean analyst forecasts inefficiently aggregate in formation by assigning too much weight to analysts' common information rela tive to their private information when used as a summary forecast measure o f forthcoming earnings. A more precise summary forecast of earnings than th e current mean forecast is the current mean forecast plus a positive multip le of the change in the mean forecast.