| Financial Analysts Journal
July – August 2008
Buy-Side vs. Sell-Side Analysts' Earnings Forecasts
We compare the earnings forecast performance of analysts at a large buy-side firm to that of sell-side analysts. Our tests show that the buy-side firm analysts make more optimistic and less accurate forecasts than their counterparts on the sell-side. These performance differences appear to be partially explained by the buy-side's higher retention of poor-performing analysts and by differences in performance benchmarks used to evaluate buy- and sell-side analysts.
Keywords: Motivation and Incentives;
Forecasting and Prediction;