- According to vox populi (wisdom of crowds) theory, more guesses should make consensus estimates more accurate
- With analysts forecast earnings, it holds true for up to 30 analysts as forecast error is reduced with increased analyst coverage
- However, for companies with more than 30 analysts covering it, accuracy starts to deteriorate
- This shows that more analyst estimates only improve consensus estimate accuracy to a point
Full paper available for free at SSRN.
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