AN ANALYSIS OF THE FACTORS AFFECTING THE ANALYSTS' SUPERIORITY IN EARNINGS FORECAST FOR THE KOREAN STOCK MARKET

This study compared analysts' forecasts with those of the random walk model in terms of forecast accuracy and examined the factors affecting the superiority of forecasts. using the earnings data of Korean firms after the 1997 financial crisis It has been found that analysts' forecasts are superior to those of the model and that the superiority is increasing as the time of earnings announcement is approaching. Analysis forecasts tend to have a positive bias. but the bias is gradually decreasing as the date of earnings announcement nears. Four variables affecting the superiority of the analysts have been identified firm size. timing of forecast, ownership structure. and market factor. The degree of the impact of each variable on the superiority is examined, and its implications are also discussed.