Well-rested analysts make better earnings forecasts. That’s according to a recent study, A Ruffled Mind Makes a Restless Forecast: The Effect of Rest on Analyst Forecast Accuracy, which compared the accuracy of earnings forecasts made in the days before a public holiday to forecasts made in the days following a public holiday.
The researchers also examined forecasts made following changes to daylight savings time in spring (when analysts lose an hour’s sleep) and autumn (when analysts gain an hour’s sleep).
Forecasts made after holidays are more accurate than those issued before holidays, the researchers found. The difference is “meaningful” – it’s equivalent to other drivers of analyst accuracy, such as professional experience and geographic proximity to covered companies.
Rested analysts are also more likely to make bolder forecasts. That’s good, as bolder forecasts tend to be more accurate.
Junior analysts at Goldman Sachs complained earlier this year about working 95 hours a week and sleeping five hours each night. No doubt, the findings won’t surprise exhausted Goldmanites.
