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Analysts' Forecasts of Taiwanese Firms' Earnings: Some Empirical Evidence

Author

Listed:
  • Li-Chin Jennifer Ho

    (P. O. Box 19468, Department of Accounting, College of Business Administration, University of Texas at Arlington, Arlington, Texas 76019-0468, USA)

  • Jeffrey Tsay

    (University of Texas at Arlington, USA)

Abstract

This study examines the accuracy and bias associated with the analysts' earnings forecasts of Taiwanese firms. Using the forecast data of individual analysts over 1991–1997 from the I/B/E/S database, we find that analysts' forecasts of earnings are generally more accurate than the predictions of a naïve forecasting model. However, this superiority seems to be largely confined to shorter forecast horizons. We also find that the analysts' earnings forecasts of Taiwanese firms are optimistically biased and that the bias depends on the nature of the earnings news. In addition, analysts' forecasts appear to be more accurate for larger firms and the bias also decreases with firm size. We find some variation in forecast accuracy and bias across industries but the overall results are not driven by any specific time period.

Suggested Citation

  • Li-Chin Jennifer Ho & Jeffrey Tsay, 2004. "Analysts' Forecasts of Taiwanese Firms' Earnings: Some Empirical Evidence," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 7(04), pages 571-597.
    • Handle: RePEc:wsi:rpbfmp:v:07:y:2004:i:04:n:s0219091504000238
    DOI: 10.1142/S0219091504000238
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    Citations

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    Cited by:

    1. Liu, Sun, 2017. "The impact of equity incentive plans on analysts’ earnings forecasts and stock recommendations for Chinese listed firms: An empirical study," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 29(C), pages 1-13.
    2. Isabel María García‐Sánchez & María‐Elena Gómez‐Miranda & Fátima David & Lazaro Rodríguez‐Ariza, 2019. "Analyst coverage and forecast accuracy when CSR reports improve stakeholder engagement: The Global Reporting Initiative‐International Finance Corporation disclosure strategy," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1392-1406, November.
    3. Orens, Raf & Lybaert, Nadine, 2007. "Does the financial analysts' usage of non-financial information influence the analysts' forecast accuracy? Some evidence from the Belgian sell-side financial analyst," The International Journal of Accounting, Elsevier, vol. 42(3), pages 237-271.

    More about this item

    Keywords

    Analysts' forecasts; accuracy; bias; Taiwan;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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