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Title: Maxent-based explanation of why financial analysts systematically under-predict companies’ performance
Authors: Vladik Kreinovich
Songsak Sriboonchitta
Keywords: Mathematics
Issue Date: 1-Jan-2017
Abstract: © 2017 by the Mathematical Association of Thailand. All rights reserved. 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.
ISSN: 16860209
Appears in Collections:CMUL: Journal Articles

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