Maxent-based explanation of why financial analysts systematically under-predict companies’ performance
© 2017 by the Mathematical Association of Thailand. All rights reserved. Several studies have shown that financial analysts systematically under-predict the companies’ performance, so that quarter after the quarter, 70-75% of the companies outperform these predictions. This percentage remains the sa...
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| Main Authors: | , |
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| Format: | Journal |
| Published: |
2018
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| Subjects: | |
| Online Access: | https://www.scopus.com/inward/record.uri?partnerID=HzOxMe3b&scp=85039706979&origin=inward http://cmuir.cmu.ac.th/jspui/handle/6653943832/43764 |
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| Institution: | Chiang Mai University |
| Summary: | © 2017 by the Mathematical Association of Thailand. All rights reserved. Several studies have shown that financial analysts systematically under-predict the companies’ performance, so that quarter after the quarter, 70-75% of the companies outperform these predictions. This percentage remains the same where the economy is in a boom or in a recession, whether we are in a period of strong or weak regulations. In this paper, we provide a possible Maximum Entropy-based explanation for this empirical phenomenon – an explanation rooted in the fact that financial analysts mostly analyze financial data, while to get a more accurate prediction, it is important to go deeper, into the technical issues underlying the companies functioning. |
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