A Positive Model of Earnings Forecasts: Top Down versus Bottom Up
This article analyzes the behavior of two groups of corporate earnings forecasters: analysts, who follow individual company fortunes, and market strategists, who predict earnings for various company aggregates. Using data for two market indices, the S&P 500 and the Dow Jones Industrial Average, we document that bottom-up forecasts are systematically more optimistic than top-down forecasts made by strategists. This difference is not driven by the difference in the forecast target. This finding may be explained by the incentives that analysts face and/or by cognitive bias.
Year of publication: |
2002
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Authors: | Darrough, Masako N. |
Published in: |
The Journal of Business. - University of Chicago Press. - Vol. 75.2002, 1, p. 127-152
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Publisher: |
University of Chicago Press |
Saved in:
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