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The Inefficient Use of Macroeconomic Information in Analysts' Earnings Forecasts in Emerging Markets

Author

Listed:
  • de Zwart, G.J.
  • van Dijk, D.J.C.

Abstract

This 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.

Suggested Citation

  • de Zwart, G.J. & van Dijk, D.J.C., 2008. "The Inefficient Use of Macroeconomic Information in Analysts' Earnings Forecasts in Emerging Markets," ERIM Report Series Research in Management ERS-2008-007-F&A, 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.
    • Handle: RePEc:ems:eureri:11556
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    File URL: https://repub.eur.nl/pub/11556/ERS-2008-007-F&A.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    analysts' earnings forecasts; emerging markets; forecast accuracy; macroeconomic forecasts;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G3 - Financial Economics - - Corporate Finance and Governance
    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics

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