This study examines how business strategy, industry competitive environment
and national culture affect the accuracy and level of agreement among financial
analysts who predict the future earnings of international competitors. Recent
research has reported the increasing importance played by financial analysts
regarding the stock price and market value of firms. Analysts' forecasts of
peiformance have been found to significantly affect the cost of capital, valuation
and stock price changes of firms. As the incidence of cross-national mergers and
acquisitions continues to escalate, understanding factors that systematically affect
performance predictions becomes increasingly important, especially for firms
employing cross-national merger or acquisition strategies. We find that business
strategies affect the accuracy of analysts' performance estimates while national
culture plays an important role in determining the level of agreement among
analysts' predictions. Implications and plans of action for international
management practitioners and researchers are discussed.
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