Generating earnings forecasts and ensuring that they are accurate is one of the most important tasks in the business world. After all, enormous financial investment decisions are based on the data contained in these forecasts. As a current bachelor’s degree in accounting student and future accountant, business leader or financial expert, it is important that you understand how this process is evolving.
The Growth of Crowdsourcing
Like pretty much everything else in the digital age, technology has played an important role in revolutionizing the process of creating and ensuring the accuracy of financial forecasts. Specifically, the financial sector has embraced the practice of crowdsourcing, which helps experts to generate financial forecasts with increased accuracy.
How Financial Experts Use Crowdsourcing
Crowdsourcing is defined as the practice of obtaining information or input into a task or project by enlisting the services of a large number of people, either paid or unpaid, typically via the internet. It is used by companies and financial experts as a means of receiving services, ideas, and/or information by soliciting input from a sizable group of people rather than from traditional sources. This helps provide more accurate estimates of earnings on investments.
To better understand this trend, University of Alabama at Birmingham Collat School of Business Professor Rick Johnston, along with Russell Jame, Stanimir Markov and Michael C. Wolfe researched the value of earning forecasts developed using crowdsourcing.
The goal of this study was to shed light on the crowdsourcing phenomenon by examining the value of crowdsourced earnings forecasts, specifically examining the performance of Estimize, an open platform that solicits and reports forecasts from thousands of contributors.
To see what the researchers found, view the UAB Collat School of Business infographic below: