Predictability Without Accuracy? Diversity, Consistency, and Earnings Predictability

We study the forecasting behavior of minority sell-side equity analysts. Distinct from the impact of cultural and geographic diversity, we demonstrate that, although minority analyst forecasts have lower accuracy, consistency in their forecasts generates stronger correlation between the aggregate consensus forecast and future firm-level earnings. Further, the incremental predictive ability of minority analysts increases following the Regulation Fair Disclosure (Reg FD) event. Individual-level accuracy of minority forecasts declines, but forecasts become more consistent, which improves aggregate-level predictability. Together, these findings indicate that diversity has diverse informational roles in financial markets