Simultaneous determination of UK analyst following and institutional ownership

Article Abstract:

It is possible to investigate the determinants of UK financial analyst following in a way which builds on a study undertaken in 1997 by C. Marston in which the determinants of analyst following are investigated for 251 firms from the UK Top 500 using a single equation OLS regression strategy. The new research used the number of analysts contributing to the I/B/E/S database as the measure of analyst following. Analyst following and institutional ownership were modelled as endogenous variables within a two-equation system. It was established that the determination of analyst following should be investigated within a structure which takes account of an endogenous relationship with institutional ownership.

Financial analysts

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Lead indicator models and UK analysts' earnings forecasts

Article Abstract:

A new study investigates whether an adjustment to a random walk forecast of corporate earnings can incorporate previous changes in economic lead indicators. It is shown that changes in various economic variables, such as the money supply measure M4, act as lead indicators for UK firms' earnings during the period 1986-89. A comparison of forecasts based on the broad-money model and those produced by financial analysts shows that performance is size dependent, with analysts' superiority being apparent earlier for smaller firms.

Usage, Forecasts and trends, Profits, Random walks (Mathematics), Random walk theory, Corporate profits

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The impact of segment definition on the accuracy of analysts' earnings forecasts

Article Abstract:

A study investigating the accuracy of analysts's earnings forecasts and the impact of segmental definition is presented. The research seeks to discover whether improved segment definitions would provide more accurate forecasts. The study, which examines forecasts of annual earnings by UK analysts, concludes that improved definitions of reported segments are needed if insight is to be improved.

Standards, Business forecasting

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