In this paper, we propose a rational learning-based explanation for the predictability in financial analysts' earnings forecast errors documented in prior literature. In particular, we argue that the serial correlation pattern in analysts' quarterly earnings forecast errors is consistent with an...

<heading id="h1" level="1" implicit="yes" format="display">ABSTRACT</heading>We examine the determinants and the informativeness of financial analysts' risk ratings using a large sample of research reports issued by Salomon Smith Barney, now Citigroup, over the period 1997-2003. We find that the cross-sectional variation in risk ratings is largely explained by...