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Sell-side analysts make good predictions in Brazil?

Author

Listed:
  • Melquiades Pereira Lima

    (Instituto Federal de Educação, Ciência e Tecnologia do RN)

  • Vinicio de Souza Almeida

    (Universidade Federal do Rio Grande do Norte)

Abstract

We analyze the performance of consensus forecasts and recommendations of sell-side analysts in Brazil from three measures - bias, accuracy and informativeness. The sample included 195 stocks listed on the BM & FBovespa, 75 brokers and 569 analysts. We apply OLS with panel data for a total of 8477 observations and found: i. optimistic bias and focus on recommendations to purchase, even when the target prices suggest pessimism; ii. analysts learn from mistakes, reducing their biases; iii. optimism in forecasts has positive relationship with the dollar variation and variation with negative interest rate.

Suggested Citation

  • Melquiades Pereira Lima & Vinicio de Souza Almeida, 2015. "Sell-side analysts make good predictions in Brazil?," Brazilian Review of Finance, Brazilian Society of Finance, vol. 13(3), pages 365-393.
    • Handle: RePEc:brf:journl:v:13:y:2015:i:3:p:365-393
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    More about this item

    Keywords

    Security Analysts; Price Forecast; Stock Recommendations; Return Forecast;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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