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Journal Article
Sophistication-Related Differences in Investors Models of the Relative Accuracy of Analysts Forecast Revisions
Accounting Review
Author(s)
The accuracy of sell-side analyst's forecast revisions is related to a number of factors, including characteristics of the analyst and the age of the forecast. In this study we examine whether there are differences in how sophisticated and unsophisticated investors use these factors to predict the relative accuracy of forecast revisions. We adapt the lens model methodological approach from the judgment and decision-making literature to investigate these differences in an archival setting. Our results suggest that sophisticated investors have greater knowledge overall about the relation of the factors to forecast accuracy. Further, our evidence is consistent with sophisticated investors relying more on the specific factors that provide the most benefits (relative to their costs) for predicting relative forecast accuracy.
Date Published:
2003
Citations:
Bonner, Sarah, Beverly Walther, Susan Young. 2003. Sophistication-Related Differences in Investors Models of the Relative Accuracy of Analysts Forecast Revisions. Accounting Review. (3)679-706.