Security analysts' earnings forecasts as a measure of firm performance : An empirical exploration of its domain

Purpose – The purpose of this paper is to investigate the domain of security analysts' earnings forecasts as a valid measure of firm performance. Design/methodology/approach – A survey instrument was developed and sent to 1,350 security analysts to ascertain the criteria they used in evaluating firm performance. Findings – Factor analysis indicates strong support for organizational level variables, such as top management, CEO ability, corporate culture, size as opposed to environment and industry level variables. Research limitations/implications – The domain of security analysts' earnings forecasts is broader than traditional accounting‐ and market‐based measures and more closely matches the realm of the strategic management field. Practical implications – The study presents new evidence that key organizational variables influence security analysts' earnings forecasts. Originality/value – The present study is the first to the best of one's knowledge that ascertains the factors that security analysts utilize in making earnings forecasts for the firms they follow.