How are analysts’ forecasts affected by high uncertainty?

Dan Amiram, Wayne R. Landsman, Edward L. Owens, Stephen R. Stubben

Research output: Contribution to journalArticlepeer-review


This study examines whether key characteristics of analysts’ forecasts—timeliness, accuracy, and informativeness—change when investor demand for information is likely to be especially high, i.e., during periods of high uncertainty. Findings reveal that when uncertainty is high, analysts’ forecasts are more timely but less accurate. However, analysts’ forecasts are also more informative to the market, which is consistent with investors’ demand for timely information, even if it is less accurate. We observe these findings when market prices are increasing and decreasing, consistent with the findings resulting from uncertainty in general rather than just uncertainty associated with market declines. We also examine how timeliness, accuracy, and informativeness change in response to elevated levels of three sources of uncertainty—market, industry, and firm level. We predict and find that analysts are better able to deal with heightened industry uncertainty, as reflected by greater timeliness with no loss in forecast accuracy. In contrast, analysts have greater difficulty dealing with heightened market uncertainty, as both timeliness and forecast accuracy decline.

Original languageEnglish
Pages (from-to)295-318
Number of pages24
JournalJournal of Business Finance and Accounting
Issue number3-4
StatePublished - 1 Mar 2018


  • earnings forecasts
  • financial analysts
  • uncertainty

All Science Journal Classification (ASJC) codes

  • Accounting
  • Business, Management and Accounting (miscellaneous)
  • Finance


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