Confidential revenue and profit forecasts by management and financial analysts : evidence from Turkey

Abstract

This study is a rei.) 1 i''nf· ion oi a study conducted by Schreuder and Klaassen in the Netheilands, in 1984 called "Confidential Revenue and Profit Forecasts by Management and Financial Analysts". The aim of the study is to examiné the accuracy of management's internal forecast of revenue and profit, taking analysts' forecasts as a standard of comparison for Turkey. This research design differs from the previous research in that (a) it is based on confidential instead of published data, (b) it includes revenue and profit data, and (c) it investigates the extent to which the forecasters themselves' v/ere surprised by the actual outcomes. For the study, management and analysts' forecasts on 18 companies in Istanbul Stock Exchange were collected. The findings show that managers perform slight'ly but not significantly better than the analysts. The errors are close but smaller than the Schreuder and Klaassen's study, and the difference between the revenue and profit forecasts' error is small whereas it is much higher for world revenue and profit forecast errors difference.