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Analyst Forecast Consistency




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    • Hilary is from INSEAD, and Hsu is from Hong Kong University of Science and Technology (the Department of Accounting). We thank Cam Harvey (the Editor), an Associate Editor, an anonymous referee, Richard Frankel, Frank Heflin, Sanjay Kallapur, Bin Ke, Clive Lennox, Xiaohong Liu, Ulf Luthardt, Steve Orpurt, Chul Park, Jeff Pittman, Richard Willis, and workshop participants at the Chinese University of Hong Kong, Hong Kong University of Science and Technology, the University of Lugano, and the University of Tilburg for their helpful comments. We acknowledge financial support from Hong Kong's Research Grants Council under Grant no. HKUST641908.


We show empirically that analysts who display more consistent forecast errors have greater ability to affect prices, and that this effect is larger than that of stated accuracy. These results lead to three implications. First, consistent analysts are less likely to be demoted and are more likely to be nominated All Star analysts. Second, analysts strategically deliver downward-biased forecasts to increase their consistency (if at the expense of stated accuracy). Finally, the benefits of consistency and of “lowballing” (accuracy) are increasing (decreasing) in institutional investors’ presence.