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
- EP ID EP40652
- DOI -
- Views 201
- Downloads 0
Who are the relevant stakeholders to the local government context? Empirical evidences on environmental influences in the decision-making process of English Local Authorities
This article presents empirical evidence of stakeholding in the local government context. It is the result of a survey carried out with English Local Authorities in 2001. It outlines the arena in which local government m...
A Socio-Environmental Development Programme in Action in Brazilian Amazonia
This paper deals with the process of scaling up and scaling down grassroots demands through a state-sponsored socio-environmental development programme in Brazilian Amazonia called Proambiente (Pro-environment). The pa...
Do Organizational Incentives Spur Innovation?
To date, we have only partially begun to develop an understanding of the channels through which innovation is facilitated within organizations. Although talented individuals are pivotal to supporting knowledge accumulat...
Learning Curve? Which One?
Learning curves have been studied for a long time. These studies provided strong support to the hypothesis that, as organizations produce more of a product, unit costs of production decrease at a decreasing rate (see Ar...
Strategic Management in Hospitals: Tensions between the Managerial and Institutional Lens
The relationship between organizations and their environments has been object of study by scholars of the theory of organizations and in discussions concerning organizational strategy. When these perspectives come toget...