We analyze earnings forecasts retrieved from the I/B/E/S database concerning 596 firms for the sample 1995 to 2011, with a specific focus on whether these earnings forecasts can be predicted from available data. Our main result is that earnings forecasts can be predicted quite accurately using publicly available information. Second, we show that earnings forecasts that are less predictable are also less accurate. We also show that earnings forecasters who quote forecasts that are too extreme need to correct these as the earnings announcement approaches. Finally, we show that the unpredictable component of earnings forecasts can contain information which we can use to improve the forecasts.

Additional Metadata
Keywords earnings announcements, earnings forecasts, financial analysts, financial markets
JEL Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies (jel G24), Accounting (jel M41)
Publisher Tinbergen Institute
Persistent URL hdl.handle.net/1765/41126
Series Tinbergen Institute Discussion Paper Series
Journal Discussion paper / Tinbergen Institute
Citation
de Bruijn, L.P, & Franses, Ph.H.B.F. (2013). Forecasting Earnings Forecasts (No. TI 13-121/III). Discussion paper / Tinbergen Institute (pp. 1–61). Tinbergen Institute. Retrieved from http://hdl.handle.net/1765/41126