We introduce a novel framework to predict the relative accuracy of sell-side analysts' annual earnings forecasts out-of-sample. Prior studies only evaluate forecasts shortly before the corresponding earnings release. In contrast, our study is the first to provide long-term predictions which are...

Analysts who provide more accurate earnings forecasts also issue more profitable recommendations. We demonstrate how investors can profit from this contemporaneous link by differentiating between “able” and “lucky” analysts. In line with previous studies, we find that past track records...

We examine the role of macroeconomic announcements in shaping the earnings forecasts of equity market analysts. We find that earnings forecasts strongly respond to macroeconomic releases signaling changes in overall business conditions after controlling for analysts' learning from firm- and...

Analysts providing more accurate earnings forecasts also issue more profitable recommendations. We demonstrate how investors can profit from this contemporaneous link by differentiating between "able" and "lucky" analysts. In line with previous studies, we find that past track records alone are...

We document that investors can actually profit from the contemporaneous link between earnings accuracy and recommendation profitability (Loh and Mian (2006)). Differentiating between "able" and "lucky" analysts we suggest an implementable, i.e. look-ahead bias free, trading strategy that yields...

We analyze three different mechanical models to forecast earnings and compare their forecasts with those of analysts. Moreover, we evaluate implied cost of capital (ICC) estimates that are based on these forecasts. With our analyses we answer three open questions in the literature. 1) Do model...

Recent findings indicate that macroeconomic survey forecasts are anchoring biased and therefore are inefficient. However, despite highly significant test coefficients a bias adjustment does not improve forecasts' quality. We find that the cognitive bias is a statistical artifact and that the...

Recent findings indicate that macroeconomic survey forecasts are anchoring biased and therefore are inefficient. However, despite highly significant test coefficients a bias adjustment does not improve forecasts' quality. We find that the cognitive bias is a statistical artifact because the...

We analyze the quality of macroeconomic survey forecasts. Recent findings indicate that they are anchoring biased. This irrationality would challenge the results of a wide range of empirical studies, e.g., in asset pricing, volatility clustering or market liquidity, which rely on survey data to...