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La relation firme-analyste explique-t-elle les erreurs de prévision des analystes ?

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Listed:
  • Régis Breton
  • Sébastien Galanti
  • Christophe Hurlin
  • Anne-Gaël Vaubourg

Abstract

We investigate whether the existence of a close relationship between a firm and an analyst increases or decreases the accuracy of the forecast produced by the analyst on the firm. Based on a sample of earnings per share forecasts for 208 French firms during the 1997–2007 period, we regress analyst forecast accuracy on its observable determinants. We then decompose the fixed effect of the regression and we utilize the firm-analyst pair effect as a measure of the intensity of the firm-analyst relationship. We find that a low (high) firm-analyst pair effect is associated with a low (high) forecast error, which suggests that close relationships between firms and analysts tend to reduce forecast accuracy. However, highly-experienced analysts and those who are specialized in large-capitalization firms are less subject to this bias. Classification JEL : D84, G11, G23, G24.

Suggested Citation

  • Régis Breton & Sébastien Galanti & Christophe Hurlin & Anne-Gaël Vaubourg, 2017. "La relation firme-analyste explique-t-elle les erreurs de prévision des analystes ?," Revue économique, Presses de Sciences-Po, vol. 68(6), pages 1033-1062.
  • Handle: RePEc:cai:recosp:reco_pr2_0103
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    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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