A comparative analysis of earnings forecasts in Europe

John Capstaff, Krishna Paudyal, William P. Rees

Research output: Contribution to journalArticlepeer-review

42 Citations (Scopus)


This study examines the accuracy and bias of financial analysts' EPS forecasts in nine European countries during 1987 to 1995. There are significant differences between the countries which may be due to the differences in earnings behaviour, accounting practices, and the influence of securities markets. An optimistic bias is endemic in European forecasts, consistent with research from the US. Investors who incorporate earnings forecasts in their stock selection procedures may be able to improve returns by explicitly adjusting their models for observed regularities in earnings forecast errors. However, we have shown that these regularities differ in incidence and magnitude across the countries studied, and further research is needed to effectively model these differences.
Original languageEnglish
Pages (from-to)531-562
Number of pages31
JournalJournal of Business Finance and Accounting
Issue number5-6
Publication statusPublished - 2001


  • earnings forecasts
  • Europe
  • business finance
  • accounting


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