Consensus analysts' earnings forecasts and security returns

A study examines the information content and informational efficiency of consensus analysts' forecasts in an Australian setting. Consistent with Lys and Sohn (1990) and Abarbanell (1991), analysts' forecasts were found to possess information content but did not incorporate all publicly ava...

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Bibliographic Details
Published in:Asia Pacific journal of management 1996-10, Vol.13 (2), p.101-110
Main Authors: Aitken, Michael, Frino, Alex, Winn, Roland
Format: Article
Language:English
Subjects:
Abnormal returns
Analysts
Bias
Earnings forecasting
Efficiency
Errors
Forecasting techniques
Investments
Investors
Rates of return
Release dates
Research design
Revisions
Statistical analysis
Stock exchanges
Stock prices
Studies
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Summary:A study examines the information content and informational efficiency of consensus analysts' forecasts in an Australian setting. Consistent with Lys and Sohn (1990) and Abarbanell (1991), analysts' forecasts were found to possess information content but did not incorporate all publicly available information. The empirical analysis suggests that negative security returns are associated with higher forecast errors. This contrasts with the results of Lys and Sohn (1990) and its consistent with a positive bias in forecasts. However, this did not preclude analysts' forecasts from being viable proxies for the market's expectations of future earnings.
ISSN:0217-4561
1572-9958
DOI:10.1007/BF01733819