The Accuracy and Bias of Equity Values Inferred from Analysts' Earnings Forecasts

  title={The Accuracy and Bias of Equity Values Inferred from Analysts' Earnings Forecasts},
  author={Theodore Sougiannis and Takashi Yaekura},
  journal={Journal of Accounting, Auditing \& Finance},
  pages={331 - 362}
We evaluate the extent to which unbiased and accurate estimates of equity value can be derived from three multiperiod accounting-based valuation models using consensus analysts' earnings forecasts over a four-year horizon. The models are (1) the earnings capitalization model, (2) the residual income model without a terminal value, and (3) the residual income model with a terminal value that assumes residual income will grow beyond the horizon at a constant rate determined from the expected… 

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