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Advanced Financial Analysis

Advanced Financial Analysis. Presentation of Term Paper. Introduction. -The purpose was to analyze accuracy of the analysts forecast during the 2012 on the Finnish stock market. -Analyst forecasts are used commonly in economic research

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Advanced Financial Analysis

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  1. Advanced Financial Analysis Presentation of Term Paper

  2. Introduction -The purpose was to analyze accuracy of the analysts forecast during the 2012 on the Finnish stock market. -Analyst forecasts are used commonly in economic research → currently a great debate concerning the quality of analysts forecasts among the researchers

  3. Description of Data

  4. Description of Data

  5. Description of Data

  6. Forecast Accuracy -Observations of a variable do not differ much from each other -Most studies implicate that analyst forecast contains systematic optimistic bias -We compare means and medians -The closer the zero, the better accuracy -Analysts forecasts seems to be more accurate

  7. Forecast Bias -Bias = There are consistent differences between actual outcomes and generated forecasts of thoe quantities -Too high or too low forecast -Previous studies implicate that analysts are too optimistic -Good forecast is not biased -We took mean and median to measure bias -represents systematic error -analytics are positively biased -naive models are negatively biased

  8. Testing the Hypothesis H0: Analyst error = Naive model error H0: Analyst bias = 0 H0: Naive model bias = 0

  9. Conclusions -Purpose was to re-examine previous studies -Analyst forecasts’ are more accurate than the naive model of changes in EPS and Sales -Results go along with previous study -Analyst accuracy is better

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