Does forecast accuracy matter to security analysts?

Michael B. Mikhail, Beverly R. Walther, Richard H. Willis

Research output: Contribution to journalArticlepeer-review

268 Scopus citations


We investigate if earnings forecast accuracy matters to security analysts by examining its association with analyst turnover. Controlling for firm-and time-period effects, forecast horizon and industry forecasting experience, we find that an analyst is more likely to turn over if his forecast accuracy is lower than his peers. We find no association between an analyst's probability of turnover and his absolute forecast accuracy. We also investigate another observable measure of the analyst's performance, the profitability of his stock recommendations. There is no statistical relation between the absolute or relative profitability of an analyst's stock recommendations and his probability of turnover. We interpret our findings as indicating that forecast accuracy is important to analysts.

Original languageEnglish (US)
Pages (from-to)185-200
Number of pages16
JournalAccounting Review
Issue number2
StatePublished - Jan 1 1999


  • Forecast accuracy
  • Performance evaluation
  • Recommendation profitability
  • Security analysts

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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