NEW YORK (Reuters) - Wall Street analysts, keen to please employers intent on winning business, continue to overstate expected corporate earnings growth, even as concerns about the U.S. economy mount, a study said on Thursday.

The findings of the study by finance professors at Penn State University come five years after 10 Wall Street firms agreed to pay $1.4 billion to settle charges that they issued biased research in order to win investment banking business.

The study, however, found that the investigation into biased research spearheaded by then-New York Attorney General Eliot Spitzer and the resulting fines had no effect on analysts' growth-rate forecasts.

"Analysts are rewarded for biased forecasts by their employers who want them to hype stocks so that the brokerage house can garner trading commissions and win underwriting deals," the study says.

According to the study, U.S. earnings forecasts are excessively high, at two times historic gross domestic product growth.

The study's authors examined analysts' long-term and one-year projected annual profit forecasts for all companies from 1984 to 2006.

Their findings show that analysts consistently projected earnings per share growth rates much higher than actual growth and that firms rarely meet or exceed their projected profit estimates.

Gross domestic product growth over the past 40 years has averaged 7.4 percent annually, while long-term, or on a three- to five-year basis, growth in earnings per share was forecast at 14.7 percent on average from 1984 to 2006, the study shows.

That compares with actual long-term EPS growth of 9.1 percent, it said.

The study echoes what many Wall Street strategists have already been saying about profit projections.

Strategists say 2008 profit forecasts are unrealistically high, and need to come down to reflect the current U.S. economic climate, which U.S. Treasury Secretary Henry Paulson this week said was in "sharp decline."

"Consensus numbers are often just too high," Abby Joseph Cohen, president of Goldman Sachs' Global Markets Institute, said this week. "Economic conditions have clearly deteriorated over the last few months, and we don't think that has been reflected in the consensus number."

For all of 2008, analysts are projecting earnings growth of 14.8 percent for Standard & Poor's 500 companies, Reuters Estimates' data shows, but many strategists are predicting much lower gains and some say earnings could even be flat for the year.

For the 2008 first quarter, earnings for S&P 500 companies are now expected to fall by 2.7 percent from a year earlier. Two weeks ago, analysts on average were expecting a 0.4 percent rise.

The projections are based on a compilation of S&P 500 forecasts from Wall Street strategists and industry analysts.

(Editing by Leslie Adler)

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