The Inefficient Use of Macroeconomic Information in Analysts' Earnings Forecasts in Emerging Markets
AbstractThis paper presents empirical evidence that security analysts do not efficiently use publicly available macroeconomic information in their earnings forecasts for emerging market stocks. Analysts completely ignore forecasts on political stability, while these provide valuable information for firm-level earnings growth. Analysts do incorporate output growth forecasts, but these actually bear no relevant information for firm-level earnings growth. Inflation forecasts are taken into account correctly. In addition, the information environment appears to be crucially important in emerging markets, as we find evidence that analysts handle macroeconomic information in a better way for more transparent firms.
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Bibliographic InfoPaper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number ERS-2008-007-F&A.
Date of creation: 03 Mar 2008
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emerging markets; analysts' earnings forecasts; forecast accuracy; macroeconomic forecasts;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-04-12 (All new papers)
- NEP-FOR-2008-04-12 (Forecasting)
- NEP-MAC-2008-04-12 (Macroeconomics)
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