Date of Defense
Philip Caruso, Economics
Gale Newell, Accountancy
Frederick Everett, Accountancy
aggregate measures, projection, predictability, variables, budgeting
According to William J. Casey, the past Chairman of the Securities and Exchange Commission, and recently appointed Under Secretary of State and Economic Affairs, forecasting should be the first and most important priority of all areas of management and public accounting. Only large institutional investment corporations have had access to such "useful" information when needed. Consequently, large investors are able to make more objective and intelligent investment decisions. A recent study determined that few investment corporations veritably have access to pertinent internal forecasting models. In fact, when interviewed, many executives claimed that even if they could procure such information, they doubted whether they would rely on it. Most institutional investors surveyed felt that such reports are very short on objectively verifiable fact, and very long on conjecture. The S.E.C. has mentioned that the accounting profession may be asked or required to verify, or possibly assist in preparation of public forecast reports. The objective of this paper will be to delineate and disclose the "shortcoming" of economic (earning) forecasting. If it can be unequivocally proven that forecasting is merely conjecture, and intelligent guesswork that is often inaccurate, then it is my contention that it will be superfluous for accountants to continually lament their apprehension about financial forecasting. If economists are unable to consistently resolve the quandary of forecasting, how will accountants be able to surmount this barrier?
Howell, Michael P., "A Study of the Utility and Validity of Earnings Forecasts" (1973). Honors Theses. 11.
Honors Thesis-Open Access