2003/07/01 by Sarah E. Bonner, Sarah Bonner, Beverly R. Walther +1 · 119 citations
Business, Management and Accounting · Decision Sciences · Economics, Econometrics and Finance · #Actuarial science #Auditing, Earnings Management, Governance #Computer science #Econometrics #Economics #Financial Markets and Investment Strategies #Forecasting Techniques and Applications #Sophistication
paper · doi:10.2308/accr.2003.78.3.679
published in The Accounting Review 78(3), 679-706 (American Accounting Association)
openalex publication_date 2003/07/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/22
The accuracy of sell-side analysts' forecast revisions is related to a number of factors, including characteristics of the analyst and the age of the forecast. In this study we examine whether there are differences in how sophisticated and unsophisticated investors use these factors to predict the relative accuracy of forecast revisions. We adapt the lens model methodological approach from the judgment and decision-making literature to investigate these differences in an archival setting. Our results suggest that sophisticated investors have greater knowledge overall about the relation of the factors to forecast accuracy. Further, our evidence is consistent with sophisticated investors relying more on the specific factors that provide the most benefits (relative to their costs) for predicting relative forecast accuracy.