Abstract

This study explores analyst annual earnings forecasts in New Zealand. The results show that forecasts of New Zealand firms do not suffer from the pessimistic biases found in studies of forecasts for United States firms. Similar to United States studies, however, loss firm forecasts are significantly less accurate and more optimistic. These results suggest that New Zealand firms do not tend to manage earnings to beat expectations, but poorly performing firms might attempt to deceive investors by decreasing the quality of their information environment. Furthermore, optimism does appear to be impounded in stock prices, as firms with optimistic forecasts underperform firms with pessimistic forecasts by about 30%.

Publication Date

1-1-2007

Journal Title

Investment Management and Financial Innovations

Publisher

Business Perspectives

Document Type

Article

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