Earnings forecasts are ubiquitous in today's financial markets. They are essential indicators of future firm performance and a starting point for firm valuation. Investors heavily rely on forecasts when making investment decisions. The extremely inaccurate and overoptimistic forecasts during the most recent financial crisis have raised serious doubts regarding the reliability of such forecasts. In addition, the academic literature attributes systematic biases in forecasts to analyst incentives other than providing truthful earnings forecasts. These incentives result from analysts serving market participants with different needs.
KeywordsForecast Error Forecast Accuracy Earning Forecast Analyst Forecast Individual Forecast
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