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Does analysts’ industrial concentration affect the quality of their forecasts?

He, Guanming; Sun, Yun; Li, April Zhichao

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Authors

Yun Sun



Abstract

We examine the association between financial analysts’ industrial concentration and the quality of their earnings forecasts. We find that analysts’ forecast quality, measured by forecast accuracy, forecast informativeness, and forecast timeliness, is positively associated with analysts’ industrial concentration on firm coverage, suggesting that allocation of effort and resources to the concentrated industries helps promote the quality of earnings forecasts. We also find that the positive relation of analysts’ industrial concentration with forecast accuracy and informativeness (forecast timeliness) is more (less) pronounced for firms faced with fiercer industrial product market competition, higher firm-specific risk, and/or higher information opacity. Overall, our results highlight the importance of analysts’ industrial concentration in contributing to the quality of their earnings forecasts.

Citation

He, G., Sun, Y., & Li, A. Z. (2024). Does analysts’ industrial concentration affect the quality of their forecasts?. Financial Markets and Portfolio Management, 38(1), 37-91. https://doi.org/10.1007/s11408-023-00435-0

Journal Article Type Article
Acceptance Date Sep 14, 2023
Online Publication Date Oct 17, 2023
Publication Date Mar 1, 2024
Deposit Date Sep 14, 2023
Publicly Available Date Oct 17, 2023
Journal Financial Markets and Portfolio Management
Print ISSN 1934-4554
Electronic ISSN 2373-8529
Publisher Springer
Peer Reviewed Peer Reviewed
Volume 38
Issue 1
Pages 37-91
DOI https://doi.org/10.1007/s11408-023-00435-0
Keywords G24, Forecast accuracy, M41, Forecast informativeness, G14, Forecast timeliness, Industrial concentration, Industry-specific information, G11
Public URL https://durham-repository.worktribe.com/output/1739168

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http://creativecommons.org/licenses/by/4.0/

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This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.







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