The Impact of Firm Characteristics on Individual Analysts' Earnings Forecast Accuracy in Emerging Markets

In emerging markets, investors suffer largely due to high information asymmetry and low market regulations. Financial analysts play a vital role in providing investors with insights into firm performance. However, the accuracy of financial analysts’ earnings forecasts remains an unaddressed question in emerging markets. This study aims to provide insights into the ability of financial analysts who work in the brokerage houses of Pakistan to issue their research reports. This study uses quantitative research methodology for analysis through collected data from secondary databases such as Capital IQ and the Pakistan Stock Exchange (PSX) data portal to measure individual financial analysts' forecast accuracy for their earnings forecasts. The study's findings are derived through panel regression techniques by utilizing data from 109 financial analysts who follow non-financial firms listed on the Pakistan Stock Exchange 100 Index from 2014 to 2022.  This study examines how firm characteristics influence individual analysts' forecast accuracy. This study uses firm characteristics, including ownership concentration, earnings management, and firm performance, to determine the accuracy of individual analysts' earnings forecasts in Pakistan.  The findings conclude that firm characteristics, earnings management, and ownership concentration negatively impact the analysts’ forecast accuracy. However, earnings management predominantly affects the accuracy of financial analysts compared to the ownership concentration. Because earnings management increases the complexity for financial analysts to find true information about the firm's performance. The findings contribute to the existing literature by providing insights into the role of firm-specific characteristics in shaping individual analysts' forecast accuracy.