Relative Accuracy of Judgmental and Extrapolative Methods in Forecasting Annual Earnings
AbstractThis paper identifies and analyses previously published studies on annual earnings forecasts. Comparisons of forecasts produced by management, analysts, and extrapolative techniques indicated that: (1) management forecasts were superior to professional analyst forecasts (the mean absolute percentage errors were 15.9 and 17.7, respectively, based on five studies using data from 1967-1974) and (2) judgmental forecasts (both management and analysts) were superior to extrapolation forecasts on 14 of 17 comparisons from 13 studies using data from 1964- 1979 (the mean absolute percentage errors were 21.0 and 28.4 for judgment and extrapolation, respectively). These conclusions, based on recent research, differ from those reported in previous reviews, which commented on less than half of the studies identified here.
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Bibliographic InfoPaper provided by EconWPA in its series General Economics and Teaching with number 0412007.
Length: 11 pages
Date of creation: 06 Dec 2004
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Annual; financial forecasts; Judgment vs. extrapolation; Management vs. analyst Amalgamated forecasts;
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- A - General Economics and Teaching
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-12-12 (All new papers)
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- JS Armstrong & Fred Collopy, 2004. "Integration of Statistical Methods and Judgment for Time Series," General Economics and Teaching 0412024, EconWPA.
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