Title

Using Analysts’ Forecasts to Measure Properties of Analysts’ Information Environment

Authors

Orie E. Barron, Pennsylvania State University - Main CampusFollow
Oliver Kim, University of Maryland at College ParkFollow
Steve C. Lim, Texas Christian UniversityFollow
Douglas E. Stevens, Georgia State UniversityFollow

Document Type

Article

Publication Date

1998

Abstract

This paper presents a model that relates properties of the analysts' information environment to the properties of their forecasts. First, we express forecast dispersion and error in the mean forecast in terms of analyst uncertainty and consensus (that is, the degree to which analysts share a common belief). Second, we reverse the relations to show how uncertainty and consensus can be measured by combining forecast dispersion, error in the mean forecast, and the number of forecasts. Third, we show that the quality of common and private information available to analysts can be measured using these same observable variables. The relations we present are intuitive and easily applied in empirical studies.

Comments

Originally published in:

Barron, Orie E., Oliver Kim, Steve C. Lim, and Douglas E. Stevens. 1998. “Using Analysts' Forecasts to Measure Properties of Analysts' Information Environment”. The Accounting Review 73 (4). American Accounting Association: 421–33.

(c) American Accounting Association. Posted with the permission of the publisher.

Recommended Citation

Barron, Orie E., Oliver Kim, Steve C. Lim, and Douglas E. Stevens. 1998. “Using Analysts' Forecasts to Measure Properties of Analysts' Information Environment”. The Accounting Review 73 (4). American Accounting Association: 421–33.