Universität zu Köln

Klettke, Tanja, Homburg, Carsten and Gell, Sebastian (2015). How to Measure Analyst Forecast Effort. Eur. Account. Rev., 24 (1). S. 129 - 147. ABINGDON: ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD. ISSN 1468-4497

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Abstract

Abstract We introduce a new way to measure the forecast effort that analysts devote to their earnings forecasts by measuring the analyst's general effort for all covered firms. While the commonly applied effort measure is based on analyst behaviour for one firm, our measure considers analyst behaviour for all covered firms. Our general effort measure captures additional information about analyst effort and thus can identify accurate forecasts. We emphasise the importance of investigating analyst behaviour in a larger context and argue that analysts who generally devote substantial forecast effort are also likely to devote substantial effort to a specific firm, even if this effort might not be captured by a firm-specific measure. Empirical results reveal that analysts who devote higher general forecast effort issue more accurate forecasts. Additional investigations show that analysts' career prospects improve with higher general forecast effort. Our measure improves on existing methods as it has higher explanatory power regarding differences in forecast accuracy than the commonly applied effort measure. Additionally, it can address research questions that cannot be examined with a firm-specific measure. It provides a simple but comprehensive way to identify accurate analysts.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Klettke, Tanja UNSPECIFIED UNSPECIFIED UNSPECIFIED Homburg, Carsten UNSPECIFIED UNSPECIFIED UNSPECIFIED Gell, Sebastian UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-414810
DOI:	10.1080/09638180.2014.909291
Journal or Publication Title:	Eur. Account. Rev.
Volume:	24
Number:	1
Page Range:	S. 129 - 147
Date:	2015
Publisher:	ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
Place of Publication:	ABINGDON
ISSN:	1468-4497
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language BIASED EARNINGS FORECASTS; SECURITY ANALYSTS; UNDERWRITER REPUTATION; CAREER CONCERNS; PERFORMANCE; ACCURACY; COVERAGE; REVISIONS; MATTER Multiple languages Business, Finance Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/41481