MaxEnt-Based Explanation of Why Financial Analysts Systematically Under-Predict Companies' Performance

Vladik Kreinovich, Songsak Sriboonchitta

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Abstract

Several studies have shown that financial analysts systematically under-predict the companies' performance, so that quarter after the quarter, 70-75% of the companies outperform these predictions. This percentage remains the same where the economy is in a boom or in a recession, whether we are in a period of strong or weak regulations. In this paper, we provide a possible Maximum Entropy-based explanation for this empirical phenomenon -- an explanation rooted in the fact that financial analysts mostly analyze financial data, while to get a more accurate prediction, it is important to go deeper, into the technical issues underlying the companies functioning.

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Published

2017-10-30

How to Cite

Team, S. (2017). MaxEnt-Based Explanation of Why Financial Analysts Systematically Under-Predict Companies’ Performance: Vladik Kreinovich, Songsak Sriboonchitta. Thai Journal of Mathematics, 29–34. Retrieved from https://thaijmath2.in.cmu.ac.th/index.php/thaijmath/article/view/642