Analyst valuation and corporate value discovery

Yih-Wenn Laih, Hung-Neng Lai and Chun-An Li

International Review of Economics & Finance, 2015, vol. 35, issue C, 235-248

Abstract: This paper examines firm-level valuations by financial analysts and by the market, using a traditional vector error-correction model (VECM) or threshold vector error-correction model (TVECM) to obtain the information shares of the two parties. While investors' valuations lead financial analysts' valuations in most firms, the reverse is not uncommon. A cross-sectional analysis reveals that analyst forecasts are more valuable for firms with less trading, less uncertainty, and weaker association between prices and earnings.

Keywords: Analyst forecast; Valuation; Information shares; Residual income model (search for similar items in EconPapers)
JEL-codes: G14 G32 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:35:y:2015:i:c:p:235-248

DOI: 10.1016/j.iref.2014.10.004

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