Value Line and I/B/E/S earnings forecasts

Sundaresh Ramnath, Steve Rock, Philip Shane

Research output: Contribution to journalArticlepeer-review

27 Scopus citations


This paper compares Value Line and Institutional Brokers Estimate System (I/B/E/S) analysts' earnings forecasts. Comparing the accuracy of forecasts of a single forecaster (Value Line) to consensus forecasts (I/B/E/S) offers a powerful test of the aggregation principle. Philbrick and Ricks [J. Acc. Res. 29 (1991) 397] conducted a similar study, but found no evidence that aggregation matters. Using more recent data, we reach different conclusions, finding that I/B/E/S earnings forecasts outperform Value Line significantly in terms of accuracy and as proxies for market expectations. I/B/E/S forecasting superiority is largely explained by its timing advantage and the aggregation principle. However, when we build an I/B/E/S consensus using forecasts from the I/B/E/S detail files of individual analyst forecasts, we find that some of its forecasting superiority remains after controlling for these advantages.

Original languageEnglish (US)
Pages (from-to)185-198
Number of pages14
JournalInternational Journal of Forecasting
Issue number1
StatePublished - Jan 2005
Externally publishedYes


  • Combining forecasts
  • Earnings forecasting
  • Evaluating forecasts
  • Financial analysts
  • Rationality
  • Timely composites

ASJC Scopus subject areas

  • Business and International Management


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