The accuracy of financial analysts' earnings forecasts and the Tunisian market reliance with time

Unlike previous studies which have examined the role of financial analysts in developed economies, the aim of this paper is to investigate whether following the Tunisian stock market opening, both the analyst forecast accuracy and the market's reliance on analyst forecasts, increase with time. This study is based on the hypothesis that accuracy is expected to increase over time as analysts exert more effort and gain valuable forecasting experience, and also that the reliance on analyst forecasts should increase with time as the market opens and investors become more sophisticated. The methodology employs bi-annual panel data for Tunisian stock market from 2010 to 2015. Our results are consistent with the expectations. First, results generally confirm that both the accuracy and the higher quality of analyst earnings forecasts are increasing with time. Second, we find evidence that earnings expectations are not mainly based on analyst forecast in the first sub-period (2010-2012). However, these findings are reversed in the second sub-period (2013-2015) and for the whole period (2010-2015) as analyst forecast better explain returns and exhibit greater relative information content.