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SOME STYLIZED FACTS ABOUT ANALYST ERRORS

Abstract

In our paper we outline some empirical evidences about aggregated analyst errors, i.e. systematic differences between consensually forecasted and observed prices. In particular, we find that the error is independent from the amount of analysts covering the stock, while industry plays an important role, although an error is bigger for growth companies. We also confirm previous evidence that price estimates aggregation over an index result in better estimates performance. Along with that, EPS is predicted better than price itself. Based on mentioned facts we deduce that the main reason for poor performance of analysts should likely be in their disability to choose correct discount rate. Our result contributes to literature on efficient market hypothesis, to studies of stock market analyst accuracy and to surveys of best/worst practices of equity valuation.

About the Author

O. Karapaev
Financial University
Russian Federation


References

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Review

For citations:


Karapaev O. SOME STYLIZED FACTS ABOUT ANALYST ERRORS. Review of Business and Economics Studies. 2015;3(2):46-51. (In Russ.)



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ISSN 2308-944X (Print)
ISSN 2311-0279 (Online)