Earning Forecast Bias and Accurancy in the Italian Market

The aim of this study is to evaluate the financial analysts’ earnings forecast bias and accuracy. We focus on annual earnings per share forecasts issued on Italian listed firms by brokerage analysts and find that (1) analyst are on average optimistic about the future prospects of covered firms; (2) median optimistic bias as well as forecast dispersion decline during the forecasting period toward the actual realization; (3) earnings forecasts are on average inaccurate; (4) accuracy increases with the firm size, actual profit realization, brokerage size, analyst’s specific experience on firm and, in general, during bull markets, while it declines with the number of firm the analysts follows and when the time from the forecast date to the release of actual earnings increases; (5) forecasts are less accurate for technological listed firms, compared to firms in other sectors.