Relative Accuracy of Judgmental and Extrapolative Methods in Forecasting Annual Earnings

  title={Relative Accuracy of Judgmental and Extrapolative Methods in Forecasting Annual Earnings},
  author={J. Scott Armstrong},
  journal={Corporate Finance: Governance},
  • 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… 
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