Long-Horizon Forecasts

Why do some analysts reveal their long-horizon forecasts, while many others do not? We propose an accuracy-publicity tradeoff to explain analysts' long-horizon forecast decisions, and we find evidence consistent with this hypothesis. Analysts who work for smaller brokerages, where a larger fraction of revenue comes from trading fees, are more likely to reveal their long-horizon forecasts. Using a relatively novel sample of crowd-sourced forecasts, we also show that sell-side analysts are much more likely to issue long-horizon forecasts than buy-side analysts, consistent with sell-side analysts using long-horizon forecasts to attract new clients. Variation in the expected rewards from publicity across portfolio firms and analysts also affects analysts' long-horizon forecast decisions. Last, we show that revealing long-horizon forecasts affects analysts' careers. Analysts who issue long-horizon forecasts and work for brokerages that value publicity are less likely to lose their job, but are also less likely to move to a top brokerage