Financial analysts' forecasts of earnings: Their value to investors

Dan Givoly*, Josef Lakonishok

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

46 Scopus citations


This paper attempts to determine whether financial analysts' forecasts of earnings are useful to investors. This is accomplished by devising and evaluating the performance of trading rules under which transactions are triggered by revisions in earnings forecasts. The main finding is that an investor who acts upon the publicly available revisions of earnings forecasts can consistently outperform a buy-and-hold policy; in fact, such an investor could more than double his return. The results are inconsistent with the efficient market-hypothesis and indicate that the market reacts gradually rather than instantaneously to new information.

Original languageEnglish
Pages (from-to)221-233
Number of pages13
JournalJournal of Banking and Finance
Issue number3
StatePublished - 1980


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