International Differences in Analyst Forecast Properties

Ang, James S.; Ciccone, Stephen J.

doi:10.2139/ssrn.275091

“…Hail and Leuz (2006) provide empirical support consistent with the view that firms from countries with more extensive disclosure requirements have a significant lower cost of equity capital. Ang and Ciccone (2001) find that firms in countries with more disclosure requirements have lower dispersion of analysts' forecasts of error. Thus firm level benefits seem to follow from country level institutional transparency.…”

Section: Introductionmentioning

confidence: 80%

Determinants of the Strength of Auditing and Reporting Standards: a Cross-Country Study

Boolaky¹,

Krishnamurti²,

Hoque³

2013

AABFJ

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Our study addresses the research gap regarding the absence of an empirical cross-country study on the determinants of the strength of auditing and reporting standards (SARS). Using data on 133 countries at various stages of development, we examine the role of environmental factors that influence a country's strength of auditing and reporting standards. Our empirical results confirm that institutional infrastructure, financial market development and higher education and training jointly influence a country's strength of auditing and reporting standards. We obtain qualitatively similar subsample results when we partition countries on the basis of economic development. AbstractOur study addresses the research gap regarding the absence of an empirical cross-country study on the determinants of the strength of auditing and reporting standards (SARS). Using data on 133 countries at various stages of development, we examine the role of environmental factors that influence a country's strength of auditing and reporting standards. Our empirical results confirm that institutional infrastructure, financial market development and higher education and training jointly influence a country's strength of auditing and reporting standards. We obtain qualitatively similar subsample results when we partition countries on the basis of economic development.

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“…The international evidence seems mixed and inconclusive. For instance, while Chang et al (2000) found evidence that a country's legal system helps us to understand the accuracy of analysts, Ang and Ciccone (2001) reached the opposite conclusion. Hope (2003) found that the enforcement of accounting standards and firm-level disclosure were important determinants of forecast accuracy.…”

Section: Literature Reviewmentioning

confidence: 99%

Proximity to hubs of expertise and financial analyst forecast accuracy

Cavezzali

¹

,

Crepaldi

²

,

Rigoni

³

2014

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This paper investigates whether the geographical proximity of financial analysts to hubs of information and expertise can influence their forecasting accuracy. Recent studies show that the financial analyst forecasting process show a systematic difference in earnings forecast accuracy dependent on the geographical distance of analysts from the companies they follow. The literature argues that local analysts issue more accurate forecasts because they have an informational advantage over analysts who are further away. Industrial centres can constitute important knowledge spillovers by creating formal and informal networks amongst firms and higher education and research institutions. In such a hub, information can easily flow and propagate. Our hypothesis is that physical proximity to these hubs, and not to the companies they follow, is an advantage for financial analysts, leading to the issue of more accurate forecasts. Using a sample of 205 observations related to 33 firms, across seven countries and ten sectors, our results are consistent with the hypothesis.

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“…However, the international evidence seems mixed and inconclusive. For instance, while Chang, Khanna and Palepu (2000) found evidence that a country's legal system helps us to understand the accuracy of analysts, Ang and Ciccone (2001) reached the opposite conclusion. Hope (2003) found that the enforcement of accounting standards and firm-level disclosure were important determinants of forecast accuracy.…”

Section: Literature Reviewmentioning

confidence: 99%

“…1 In general, financial analysts are 'intermediaries' between the managers of the firms which they follow and financial markets. They use a heterogeneous set of information (hard and soft, explicit and tacit) about the company which they follow, the industry and the economic system in order to arrive at earnings forecasts, company value and an investment recommendation.…”

Section: Introductionmentioning

confidence: 99%

Proximity to Hubs of Expertise in Financial Analyst Forecast Accuracy

Cavezzali

¹

,

Crepaldi²,

Rigoni

³

2013

View full text Add to dashboard Cite

This paper investigates whether the geographical proximity of financial analysts to hubs of information and expertise can influence their forecasting accuracy. Recent studies show that the financial analyst forecasting process show a systematic difference in earnings forecast accuracy dependent on the geographical distance of analysts from the companies which they follow. The literature argues that local analysts issue more accurate forecasts because they have an informational advantage over analysts who are further away. Industrial centres can constitute important knowledge spillovers by creating formal and informal networks amongst firms and higher education and research institutions. In such a hub, information can easily flow and propagate. Our hypothesis is that physical proximity to these hubs, and not to the companies they follow, is an advantage for financial analysts, leading to the issue of more accurate forecasts. Using a sample of 205 observations related to 33 firms, across seven countries and ten sectors, our results are consistent with the hypothesis. Even though preliminary, and probably in part biased by sample selection issues, overall, the empirical evidence confirms the benefit of being part of a network, formal or informal, in which information, knowledge and expertise sharing can flow easily. We try to give some new evidence on what can cause variations in financial analyst accuracy by exploring these concepts, well known and analysed in other fields, but new in the context of financial analysts

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International Differences in Analyst Forecast Properties

Cited by 34 publications

References 35 publications

Determinants of the Strength of Auditing and Reporting Standards: a Cross-Country Study

Determinants of the Strength of Auditing and Reporting Standards: a Cross-Country Study

Proximity to hubs of expertise and financial analyst forecast accuracy

Proximity to Hubs of Expertise in Financial Analyst Forecast Accuracy

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