Analysts’ general forecast effort as determinant of earnings forecast accuracy

In this chapter, I introduce a new variable to measure the forecast effort an analyst devotes when making earnings forecasts. The main idea of my measure is considering not only the forecast effort that can be derived from an analyst’s behavior for one specific firm, but also an analyst’s general behavior with respect to other firms. Thus, I label my new effort measure “general forecast effort” and provide empirical evidence that it can explain differences in analysts’ forecast accuracy. The following ideas and analyses largely base on my research study “How to measure Analyst Forecast Effort” which will be published as journal article in the European Accounting Review. I have presented this study at the 34th European Accounting Association Annual Congress in Rome (2011), at the American Accounting Association Annual Meeting in Denver (2011) and at the Accounting Seminar for doctoral students at the University of Cologne.