An Investigation Of The Comparative Accuracy And Bias Of Equity Securities Analysts East And West European Firms Earnings Forecasts

Abstract

This research investigates the comparative accuracy and bias of West European and East European firms equity securities analysts earnings forecasts for 29 European countries 12 of which are characterized as being East European. We utilize measures of equity securities analysts earnings forecast accuracy and bias in making comparisons of the statistical properties of earnings forecasts for firms having domiciles in East European and West European countries. Our results indicate that securities analysts earnings forecasts for companies domiciled with East European countries display larger forecast error and greater degree of optimistic forecast bias. Our results persist after controlling for cross-listing of ADRs on US securities exchanges. We generalize our results using the growing literature on the ever-changing characteristics of the Russian people, Russian business professionals and the rapidly evolving Russian stock market and the transitional Russian political economy.