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- Publisher
- Springer Journals
- Copyright
- Copyright © 2010 by Springer Science+Business Media, LLC
- Subject
- Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
- ISSN
- 0924-865X
- eISSN
- 1573-7179
- DOI
- 10.1007/s11156-010-0187-y
- Publisher site
- See Article on Publisher Site
Abstract
The main purpose of this paper is to demonstrate a method to forecast stock price using analyst earnings forecasts as essential signals of firm valuation. The demonstrated method is based on the residual income model (RIM), with adjustment for autocorrelation. Over the past decade, the RIM has been widely accepted as a theoretical framework for equity valuation based on fundamental information from financial reports. This paper shows how to implement the RIM for forecasting and how to address autocorrelation to improve forecast accuracy. Overall, this paper provides a method to forecast stock price that blends fundamental data with mechanical analyses of past time series.
Journal
Review of Quantitative Finance and Accounting – Springer Journals
Published: Jun 23, 2010