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Do formal risk assessments improve analysts’ target price accuracy?

Research output: Working paper

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Do formal risk assessments improve analysts’ target price accuracy? / Hashim, Noor; Strong, Norman.

Lancaster : The Department of Accounting and Finance, 2015.

Research output: Working paper

Harvard

Hashim, N & Strong, N 2015 'Do formal risk assessments improve analysts’ target price accuracy?' The Department of Accounting and Finance, Lancaster.

APA

Hashim, N., & Strong, N. (2015). Do formal risk assessments improve analysts’ target price accuracy? The Department of Accounting and Finance.

Vancouver

Hashim N, Strong N. Do formal risk assessments improve analysts’ target price accuracy? Lancaster: The Department of Accounting and Finance. 2015.

Author

Hashim, Noor ; Strong, Norman. / Do formal risk assessments improve analysts’ target price accuracy?. Lancaster : The Department of Accounting and Finance, 2015.

Bibtex

@techreport{48d2f6e6fa5f4371aaa8d93fd3f4b06b,
title = "Do formal risk assessments improve analysts{\textquoteright} target price accuracy?",
abstract = "Equity analysts{\textquoteright} target price estimates are uncertain. Some analysts gauge this uncertainty by supplementing their target prices with a risk assessment in the form of a bull–bear analysis (BBA). We explore whether disclosing a BBA reduces analysts{\textquoteright} target price error or, alternatively, whether analysts disclose a BBA to make their forecasts seem more credible and distract attention from less accurate target prices. Using propensity score matching to control for selection bias, combined with a difference-in-differences estimation to allow for company- and analyst-specific effects, we estimate the effect of supplementing target prices with a BBA on the target price accuracy of US stocks. We find that target prices are significantly more accurate, both statistically and economically, when analysts supplement them with a BBA. Our results shed light on the role of risk and uncertainty assessments in improving analyst valuations.",
author = "Noor Hashim and Norman Strong",
year = "2015",
language = "English",
publisher = "The Department of Accounting and Finance",
type = "WorkingPaper",
institution = "The Department of Accounting and Finance",

}

RIS

TY - UNPB

T1 - Do formal risk assessments improve analysts’ target price accuracy?

AU - Hashim, Noor

AU - Strong, Norman

PY - 2015

Y1 - 2015

N2 - Equity analysts’ target price estimates are uncertain. Some analysts gauge this uncertainty by supplementing their target prices with a risk assessment in the form of a bull–bear analysis (BBA). We explore whether disclosing a BBA reduces analysts’ target price error or, alternatively, whether analysts disclose a BBA to make their forecasts seem more credible and distract attention from less accurate target prices. Using propensity score matching to control for selection bias, combined with a difference-in-differences estimation to allow for company- and analyst-specific effects, we estimate the effect of supplementing target prices with a BBA on the target price accuracy of US stocks. We find that target prices are significantly more accurate, both statistically and economically, when analysts supplement them with a BBA. Our results shed light on the role of risk and uncertainty assessments in improving analyst valuations.

AB - Equity analysts’ target price estimates are uncertain. Some analysts gauge this uncertainty by supplementing their target prices with a risk assessment in the form of a bull–bear analysis (BBA). We explore whether disclosing a BBA reduces analysts’ target price error or, alternatively, whether analysts disclose a BBA to make their forecasts seem more credible and distract attention from less accurate target prices. Using propensity score matching to control for selection bias, combined with a difference-in-differences estimation to allow for company- and analyst-specific effects, we estimate the effect of supplementing target prices with a BBA on the target price accuracy of US stocks. We find that target prices are significantly more accurate, both statistically and economically, when analysts supplement them with a BBA. Our results shed light on the role of risk and uncertainty assessments in improving analyst valuations.

M3 - Working paper

BT - Do formal risk assessments improve analysts’ target price accuracy?

PB - The Department of Accounting and Finance

CY - Lancaster

ER -