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Determinants of Horizons of Analysts' Earnings Forecasts
Chen - Lung Chin,
National Chengchi University
Chien - Ju Lu, National Chengchi University
ABSTRACT. The objective of this paper is to examine the association among horizons of analysts’earnings forecasts, the ownership structure, and foreign investment in the context of so-called insider economy. Using a sample of Taiwanese listed firms during 2001-2005, we first find that analysts’ forecast horizons are longer for firms with lower control divergence. Second, analysts are more likely to issue longer earnings forecasts for firms with higher foreign holdings compared to those with lower foreign holdings. Third, analysts’ earnings forecast horizons have negative or no association with the shareholdings of domestic institutional investors, consistent with prior studies (e.g., Khanna and Palepu, 1999). Finally, the difference in turnover rates of stock by held foreign investors in forecasting year between short and long-term forecast groups are statistically insignificant,while the difference is significant in the first year after forecasting date.
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