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Revising Earnings Per Share Forecasts: An Empirical Test

Author

Listed:
  • Charles H. Brandon

    (University of Rhode Island)

  • Jeffrey E. Jarrett

    (University of Rhode Island)

Abstract

In this study, we postulate that forecasters desire to improve their performance by studying their past forecasting errors. To improve performance, forecasters may measure their past mistakes and revise their forecasts by forecast revision techniques. In an empirical test, forecasts of fifty firms' EPS were prepared by seven forecasting models. The initial forecasts were corrected by the Theil optimal linear correction technique and a Bayesian revision adjustment. Results indicate that the optimal linear correction technique is superior to not correcting for past forecast error.

Suggested Citation

  • Charles H. Brandon & Jeffrey E. Jarrett, 1979. "Revising Earnings Per Share Forecasts: An Empirical Test," Management Science, INFORMS, vol. 25(3), pages 211-220, March.
    • Handle: RePEc:inm:ormnsc:v:25:y:1979:i:3:p:211-220
    DOI: 10.1287/mnsc.25.3.211
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    Cited by:

    1. Bianchi, Lisa & Jarrett, Jeffrey & Choudary Hanumara, R., 1998. "Improving forecasting for telemarketing centers by ARIMA modeling with intervention," International Journal of Forecasting, Elsevier, vol. 14(4), pages 497-504, December.

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