The evolution of financial analysts’ forecasts on Asian emerging markets

Abstract

This study investigates the financial analysts’ performance on eight Pacific-Basin markets from 1990 to 2000. We focus on the analysis of the crisis in 1997 on the quality of earnings forecasts. The Asian crisis should stand as a serious but positive breakdown in the performance of analysts. We show that before as after the crash, analysts issued forecasts systematically upward biased. The magnitude of errors, in 2000, was still superior to that observed in the pre-crash period. We conclude that analysts have failed to anticipate the latent financial problems before the crisis and to draw the lesson from it.