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The financial analyst forecasting literature: A taxonomy with suggestions for further research

Journal

INTERNATIONAL JOURNAL OF FORECASTING
Volume 24, Issue 1, Pages 34-75

Publisher

ELSEVIER
DOI: 10.1016/j.ijforecast.2007.12.006

Keywords

earnings forecasting; financial analysts; financial markets; stock price forecasts; analyst stock recommendations; analyst research reports; analyst decision processes; analysts' incentives; analyst expertise; analyst inefficiency; forecast bias; financial analyst literature review

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This paper develops a taxonomy of research examining the role of financial analysts in capital markets. The paper builds on the perspectives provided by Schipper [Schipper, K. (199 1). Analysts' forecasts. Accounting Horizons, 5, 105-131] and Brown [Brown, L. (1993). Earnings forecasting research: Its implications for capital markets research. International Journal of Forecasting, 9, 295-320]. We categorize papers published since 1992, describe the research questions addressed, and suggest avenues for further research in seven broad areas: (1) analysts' decision processes; (2) the nature of analyst expertise and the distributions of earnings forecasts; (3) the information content of analyst research; (4) analyst and market efficiency; (5) analysts' incentives and behavioral biases; (6) the effects of the institutional and regulatory environment (including cross-country comparisons); and (7) research design issues. (C) 2007 International Institute of Forecasters. Published by Elsevier B.V. All rights reserved.

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