“Analysts knew they were being watched and expended ‘extra efforts’ on metrics on which they were being measured,” they wrote. “Over time, as the attention waned, the analysts may have reduced their extra efforts and their forecast properties could have suffered.”
Widening disagreement among analysts suggests another possibility, that something about the data they get from companies is preventing better predictions.
“Greater dispersion indicates less agreement among analysts regarding expected earnings due to higher uncertainty, or lower availability or reliability of information, reducing the value of forecasts,” they said. “The continued problem with the information environment, therefore, seems to be largely due to the quality of financial reports.”