Analysts’ annual earnings forecasts and changes to the I/B/E/S database

Abstract

I/B/E/S is a common source of analyst earnings forecast data, and the reliability of these data is important for practice and academic research. Examining a common sample period, we compare annual earnings forecasts across two versions of the I/B/E/S detail file, one made available in 2009 and the other made available in 2015. We find substantial differences in the contents of these two versions of the detail file as well as significant differences in the attributes of the earnings forecasts available in each version. Specifically, the earnings forecasts in the more recent version are more accurate and less biased, and they identify substantially different firms as meeting or just beating analysts’ expectations than those in the older version. To highlight the potential impact of these differences, we show that the economic magnitude of the effects of analyst experience and brokerage size on earnings forecast accuracy change by over 30% when we use the more recent version. Additional analyses suggest that the differences across versions of the detail file are ongoing. In contrast, we find that different versions of the summary file exhibit only minor differences over time. We also find significant differences in the properties of consensus earnings forecasts calculated from the individual earnings forecasts available in the detail file and consensus earnings estimates from the summary file. Finally, we provide guidance to researchers using I/B/E/S for analyst earnings forecast data.