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Analyst forecast performance on banks: does experience matter?

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  • Lijing Du
  • Jian Huang

Abstract

In this paper we investigate the relation between analysts' forecast performance and the opacity of a company; in particular, we compare analysts' forecast accuracy between Bank Holding Companies (BHCs) and non-financial companies. During the period of 1999 to 2004, forecast accuracy on banks is better than forecast accuracy on non-financial firms; however, analysts forecast accuracy for banks is significantly worse for the period of 2005 to 2008. In addition, while analysts' experience is positively associated with their forecast performance for non-financial firms, there is no evidence that experience improves forecast accuracy for BHCs. That is, BHCs are more difficult to understand during current crisis, and that prior experience does not help as much compared to non-financial firms. Our results suggest an increase in uncertainty risk for BHC's leading up to the recent financial crisis.

Suggested Citation

  • Lijing Du & Jian Huang, 2015. "Analyst forecast performance on banks: does experience matter?," American Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 4(2), pages 93-112.
    • Handle: RePEc:ids:amerfa:v:4:y:2015:i:2:p:93-112
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    Cited by:

    1. Persakis, Antonios & Iatridis, George Emmanuel, 2023. "How economic uncertainty influences the performance of investor perceptions and behavior," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 51(C).

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