Information or Noise, A Study on the Accuracy of Analysts’ Forecasts in Brazil

This paper evaluates the accuracy of financial analysts' forecasts. These predictions are very important since they are used by investors and administrators during the decision making process. We address the quality of the forecasts by comparing them to the actual numbers, using the root mean squared error (RMSE) as the accuracy measure. The data used in this research is provided by the Central Bank of Brazil in the weekly survey with the market analysts: Focus Report. Our results support the hypothesis that analysts' forecasts are less accurate the further they are away from the date of release of the actual numbers and there is some level of information in some classes of economic indices forecasts which could be used by investors