Abstract
In this paper, we analyze how subjective adjustments to baseline models by analysts a®ect the
forecasting accuracy. For a panel of analyst reports, we show that target price forecasts that
deviate signi¯cantly from simple multiple-based pseudo-target prices are (ex-post) more accurate.
By controlling for various stock and broker characteristics, we also demonstrate that our
results are not driven by the degree of sophistication of the valuation models. Furthermore, we
show that investors know about this increased informativeness of forecasts as the abnormal
market return around target price revisions is signi¯cantly higher if analysts deviate from simple
pseudo-target prices when issuing their forecasts.
Lingua originale | Inglese |
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pagine (da-a) | 1-31 |
Numero di pagine | 31 |
Rivista | Journal of Financial Management, Markets and Institutions |
Volume | 10 |
Numero di pubblicazione | 01 |
DOI | |
Stato di pubblicazione | Pubblicato - 2022 |
Keywords
- Target prices
- equity research
- forecast accuracy
- multiple valuation.