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Abstract

Consensus measures on earnings forecasts such as the IBES mean and median are point estimates of sample distributions of analyst earnings forecasts. Often, these consensus measures serve as informational proxies for investors in their decision making process. This study utilises the Australian IBES earnings forecast data from 1988 through 2008 to show that analyst earnings forecast distributions are non-normal across the 20-year period. These results suggest the possibility of a more accurate surrogate consensus than the simple IBES mean and median. This, in turn, may have some bearing on those who generally employ analysts’ consensus earnings forecasts for stock valuation and modelling purposes.

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