Financial Reporting and Analysts’ Forecasts Accuracy during the Financial Crisis: Evidence for Romania

Author:Univ. Lecturer Mihaela IONAȘCU, Ph. D.

JEL:G17, G32, M41

DOI:

Keywords:analysts’ forecasts accuracy, financial crisis, financial reporting, emergent markets

Abstract:
The purpose of the paper is to explore the impact of financial crisis on analysts’ forecasts for Romanian listed companies. There are currently opinions upholding that financial reporting, by means of fair value measurements, induced an erroneous perspective on companies’ future performance and was one of the drivers of the financial crisis. However, in an unstable business environment, such as the economic turmoil determined by the global crisis, quality financial information can reduce uncertainty about companies’ future performance and can contribute to a decrease in forecasts errors. Using all available analysts’ forecasts for Romanian listed companies from Thomson Reuters I/B/E/S database for the period 2004- 2010, the paper shows that analysts’ forecasts accuracy decreased significantly when the crisis first impacted Romanian economy, and returned to normal levels in the following years. The quality of financial reporting contributed, in all circumstances, to a decrease in forecast errors.\r\n

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