Economics at your fingertips  

Does the firm-analyst relationship matter in explaining analysts' earnings forecast errors?

Régis Breton (), Sébastien Galanti, Christophe Hurlin and Anne-Gaël Vaubourg ()
Additional contact information
Anne-Gaël Vaubourg: Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - UB - Université de Bordeaux

Working Papers from HAL

Abstract: We study whether financial analysts' concern for preserving good relationships with firms' managers motivates them to issue pessimistic or optimistic forecasts. Based on a dataset of one-yearahead EPS forecasts issued by 4 648 analysts concerning 241 French firms (1997-2007), we regress the analysts' forecast accuracy on its unintentional determinants. We then decompose the fixed effect of the regression and we use the firm-analyst pair effect as a measure of the intensity of the firm-analyst relationship. We find that a low (high) firm-analyst pair effect is associated with a low (high) forecast error. This observation suggests that pessimism and optimism result from the analysts' concern for cultivating their relationship with the firm's management.

Keywords: panel regression; financial analysts; earnings forecasts; soft information; panel regression. (search for similar items in EconPapers)
Date: 2013-08-16
New Economics Papers: this item is included in nep-bec, nep-for, nep-lam, nep-ltv and nep-neu
Note: View the original document on HAL open archive server:
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
Working Paper: Does the firm-analyst relationship matter in explaining analysts' earnings forecast errors? (2011) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().

Page updated 2023-08-31
Handle: RePEc:hal:wpaper:hal-00862996