IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v41y1995i8p1392-1396.html
   My bibliography  Save this article

Note on Adjustments to Analysts' Earnings Forecasts Based Upon Systematic Cross-Sectional Components of Prior-Period Errors

Author

Listed:
  • Pieter T. Elgers

    (Department of Accounting, University of Massachusetts, Amherst, Massachusetts 01003)

  • May H. Lo

    (Western New England College, Springfield, Massachusetts 01119)

  • Dennis Murray

    (University of Colorado, Denver, Colorado 80202)

Abstract

This study assesses the effectiveness of using systematic components of cross-sectional forecast errors from prior years in order to adjust current analysts' earnings forecasts. The empirical results document that a significant component of the cross-sectional MSE in analysts' forecasts is systematic, and that parameter estimates from earlier periods enable the elimination of a substantial portion of the systematic errors in current forecasts. Further improvements in forecast accuracy are attained by the incorporation of prior-year excess security returns in order to reduce unsystematic error.

Suggested Citation

  • Pieter T. Elgers & May H. Lo & Dennis Murray, 1995. "Note on Adjustments to Analysts' Earnings Forecasts Based Upon Systematic Cross-Sectional Components of Prior-Period Errors," Management Science, INFORMS, vol. 41(8), pages 1392-1396, August.
    • Handle: RePEc:inm:ormnsc:v:41:y:1995:i:8:p:1392-1396
    DOI: 10.1287/mnsc.41.8.1392
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.41.8.1392
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.41.8.1392?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pieter T. Elgers & May H. Lo & Wenjuan Xie & Le Emily Xu, 2016. "A Contextual Evaluation of Composite Forecasts of Annual Earnings," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 19(03), pages 1-40, September.
    2. Goodwin, Paul, 2002. "Integrating management judgment and statistical methods to improve short-term forecasts," Omega, Elsevier, vol. 30(2), pages 127-135, April.
    3. Blanc, Sebastian M. & Setzer, Thomas, 2015. "Analytical debiasing of corporate cash flow forecasts," European Journal of Operational Research, Elsevier, vol. 243(3), pages 1004-1015.
    4. Lawrence, Michael & O'Connor, Marcus & Edmundson, Bob, 2000. "A field study of sales forecasting accuracy and processes," European Journal of Operational Research, Elsevier, vol. 122(1), pages 151-160, April.
    5. Boris Groysberg & Paul Healy & George Serafeim & Devin Shanthikumar, 2013. "The Stock Selection and Performance of Buy-Side Analysts," Management Science, INFORMS, vol. 59(5), pages 1062-1075, May.
    6. Anna M. Cianci & Satoris S. Culbertson, 2010. "The Impact of Motivational and Cognitive Factors on Optimistic Earnings Forecasts," Chapters, in: Brian Bruce (ed.), Handbook of Behavioral Finance, chapter 11, Edward Elgar Publishing.
    7. Lawrence, Michael & Goodwin, Paul & O'Connor, Marcus & Onkal, Dilek, 2006. "Judgmental forecasting: A review of progress over the last 25 years," International Journal of Forecasting, Elsevier, vol. 22(3), pages 493-518.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:41:y:1995:i:8:p:1392-1396. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.