Analysts’ Consensus and Target Price Accuracy: A Study in Latin America

Journal Title: BAR: Brazilian Administration Review - Year 2017, Vol 14, Issue 4

Abstract

Market analysts, by means of issuance of their opinions (earnings per share, target prices, and recommendations), have been the object of several earlier studies. Previous literature identifies analysts as information intermediaries between companies and investors, and identifies their role in reducing the information asymmetry. This study investigates whether the estimated standard deviations of price-target shares issued by capital market analysts are informative, and ascertains whether it is possible to identify smaller errors in analysts’ forecasts from the verification of the consensus among them. The study is carried out in Latin American countries, and relies on a database of 23,367 estimates of target-price shares during the period from October 2010 to January 2017. It also takes into account the number of analysts who issued the estimates, the company market value, and the government effectiveness between the countries. The results indicate that the greater the consensus (smaller standard deviation), the smaller the forecast errors. Thus, the standard deviation of target-price estimates presents an informative tool to investors about forecast accuracy. Another important result shows that the greater the government effectiveness, the greater the forecast accuracy of target-price estimates issued by the analysts.

Authors and Affiliations

Antônio, Rafael Moreira; Ambrozini, Luciana Cardoso Siqueira; Gatsios, Rafael Confetti; Magnani, Vinícius Medeiros

Keywords

Related Articles

A Theoretical Essay on Sustainability and Environmentally Balanced Output Growth: Natural Capital, Constrained Depletion of Resources and Pollution Generation

The fact that today’s activities are imposing a heavy burden on the earth's capacity has led to an increasing interest in environmental issues. It is emphasized that rapid production growth has exhausted natural resourc...

Trust and Supplier-buyer Relationships: An Empirical Analysis

This paper investigates if regional differences are able to influence trust-based relationship with suppliers. It presents the results of a survey of 338 processing plants located in Western and Asian countries using st...

Determinants of the Capital Structure of Small and Medium Sized Brazilian Enterprises

This research investigates the determinants of the capital structure of small and medium enterprises (SMEs) using a unique database that includes over 19,000 Brazilian firms and spans 13 years of data. The econometric...

The Social and Intellectual Dimensions in the Construction of Scientific Knowledge: The Institutional Theory in Organization Studies in Brazil

Based on the assumption that scientific knowledge is a social construction, (re)produced by a community of practicing researchers, in this article we seek to delineate two dimensions of this process. The first, which we...

Balancing Internal and External R&D Strategies to Improve Innovation and Financial Performance

This research investigated the complementarity of internal and external R&D for innovation development and the effect of innovation on the financial performance of European manufacturing firms. Using multigroup structur...

Download PDF file
  • EP ID EP40652
  • DOI -
  • Views 210
  • Downloads 0

How To Cite

Antônio, Rafael Moreira; Ambrozini, Luciana Cardoso Siqueira; Gatsios, Rafael Confetti; Magnani, Vinícius Medeiros (2017). Analysts’ Consensus and Target Price Accuracy: A Study in Latin America. BAR: Brazilian Administration Review, 14(4), -. https://europub.co.uk/articles/-A-40652