Relative Accuracy of Judgmental and Extrapolative Methods in Forecasting Annual Earnings

@article{Armstrong1983RelativeAO,
  title={Relative Accuracy of Judgmental and Extrapolative Methods in Forecasting Annual Earnings},
  author={J. Scott Armstrong},
  journal={Corporate Finance: Governance},
  year={1983}
}
  • J. Armstrong
  • Published 1 October 1983
  • Environmental Science
  • Corporate Finance: Governance
This paper identifies and analyses previously published studies on annual earnings forecasts. Comparisons of forecasts produced by management, analysts, and extrapolative techniques indicated that: (1) management forecasts were superior to professional analyst forecasts (the mean absolute percentage errors were 15.9 and 17.7, respectively, based on five studies using data from 1967-1974) and (2) judgmental forecasts (both management and analysts) were superior to extrapolation forecasts on 14… 
Long-term Earnings Forecasts in the Electric Utility Industry: Accuracy and Valuation Implications
This paper integrates research on the accuracy of alternative long-term earnings forecasts, the gain in accuracy achievable from combining various forecasts, and the power of different long-term
The Accuracy of Long-Term Earnings Forecasts for Industrial Firms
Valuation analysis, security selection, and cost of capital estimation techniques are dependent on long-term earnings forecasts. This study focuses on the accuracy of long-term earnings forecasting
Judgmental adjustment of earnings forecasts
Earnings forecasts have received a great deal of attention, much of which has centered on the comparative accuracy of judgmental and objective forecasting methods. Recently, studies have focused on
Combining Forecasts
To improve forecasting accuracy, combine forecasts derived from methods that differ substantially and draw from different sources of information. When feasible, use five or more methods. Use formal
Procedures for Revising Management Judgments Forecasts
Forecast improvement is often approached by attempting to find the “best” model for a given situation. Less attention has been paid to the possibility of examining past prediction errors for patterns
Composite forecasting using ridge regression
Recent studies have shown that composite Forecasting produces superior forecasts when compared to individual forecasts. This paper extends the existing literature by employing ridge regression
Composite Earnings Forecasting Efficiency
Composite earnings-per-share models were estimated for 35 chemical, food, and utility firms during the 1979–1980 period. It is generally held that financial analysts produce earnings forecasts
On Knowing When to Switch from Quantitative to Judgemental Forecasts
The conditions under which forecasts from expert judgement outperform traditional quantitative methods are investigated. It is shown that judgement is better than quantitative techniques at
...
1
2
3
4
5
...

References

SHOWING 1-10 OF 58 REFERENCES
Earnings Estimates and the Accuracy of Expectational Data
This paper examines the accuracy of forecasts produced by mechanical forecasting techniques and three groups of analysts. The nine mechanical forecasting techniques are variations of exponentially
A Comparative Examination of Management Forecasts and Box-Jenkins Forecasts of Earnings
The accuracy of management forecasts of earnings, the major focus of this study, is important from several standpoints. It clearly lies at the heart of much of the debate concerning presentation of
Executives' Forecasts of Earnings per Share versus Forecasts of Naive Models
Green and Segall evaluated the predictive power of first-quarter earnings reports in two papers,' both of which generated criticisms and comments.2 Near the end of each paper, they presented data
The Superiority of Analyst Forecasts as Measures of Expectations: Evidence from Earnings
If both producers and consumers demand forecasts based solely on their forecasting ability, then the equilibrium employment of analysts, a higher cost factor than time series models, implies that
A multivariate analysis of annual earnings forecasts generated from quarterly forecasts of financial
The Financial Accounting Standards Board [1977] recently emphasized the importance of forecasted accounting earnings in the formulation of investment decisions. Empirical investigations into various
Revising Earnings Per Share Forecasts: An Empirical Test
In this study, we postulate that forecasters desire to improve their performance by studying their past forecasting errors. To improve performance, forecasters may measure their past mistakes and
Security Price Reactions To Long-Range Executive Earnings Forecasts
In addition to the recent interest of the Securities and Exchange Commission, executive forecasts of earnings have received a considerable amount of attention in the academic literature (Basi, Carey,
The Predictive Content of Interim Reports- A Time Series Analysis
The importance of interim reports to investors seems beyond dispute. Summaries of these reports appear in most of the daily newspapers and on stock exchange wire services, and security analysts
...
1
2
3
4
5
...