How could analysts’ facial trustworthiness affect their forecasting accuracy?

Introduction: People whose faces look untrustworthy tend to receive harsher social evaluations, including more severe criminal sentences. Yet little is known about how much facial trustworthiness reflects individuals' behavioral histories. We examined whether adolescent histories of delinquency and substance use predict strangers' perceptions of young men's facial trustworthiness. Methods: Boys (n = 206) recruited from schools with higher juvenile crime rates were assessed repeatedly from ages 10–24 years, including arrest records and self-reported delinquency and substance use. Coders blind to the study's purpose rated participants' facial trustworthiness from photographs taken at ages 14 and 24; parent-reported childhood family income and coder ratings of attractiveness and positive affect at age 24 were considered as controls. Results: Facial trustworthiness at age 24 (but not age 14) negatively correlated with all measures of problem behavior. Yet, self-reported tobacco use occasions from ages 12–23 had the strongest association with facial trustworthiness at age 24, a relation that persisted when controlling for arrests and delinquency from ages 12–23, other substance use, family income, ratings of age-24 positive facial affect, attractiveness, and age-14 facial trustworthiness (β = −.29, 95% CI [−.42, −.15], p < .001). Discussion: Although boys' early facial trustworthiness did not relate to their later problem behavior, men with histories of more delinquency and tobacco use appeared less facially trustworthy as adults. Appearance-related biases may have forensic and healthcare implications for young men. Additionally, prevention efforts could leverage information about the early impacts of tobacco use on appearance.

Humans have evolved to acquire the ability to read facial information in order to access information resources more quickly. People can quickly make initial judgments and establish an impression of a person from facial-related information alone. In the social life of adults, facial trustworthiness and facial attractiveness have an important role as important components of facial information. The effects of these two on social interaction are also seen in children, thus influencing their judgment on some decisions. Discuss the impact of facial information received by children on their choices through separate accounts of children’s facial trustworthiness and facial attractiveness on children’s preference judgments, mainly in terms of peer choice preferences and choices in gaming choices. The results of this paper are that both facial credibility and facial attractiveness affect children’s choice preferences, with high trustworthiness and high attractiveness being more likely to be preferred; and that facial trustworthiness and facial attractiveness share similar patterns and can influence each other.

The paper examines the effects of the mandatory adoption of International Financial Reporting Standards (IFRS) on financial analysts’ information environment, specifically on analysts forecast accuracy in the Korean market. We find that financial analysts’ forecast accuracy improves after the mandatory IFRS adoption. We further investigate the source of observed accuracy enhancements and find that the improved forecast accuracy is attributable to the increased precision in analysts’ information sets for KOSPI firms and increased opportunity for earnings management for KOSDAQ firms. We also find that the analyst coverage in Korean market is reduced after mandatory IFRS adoption.

The present study aimed to examine the effects of male defendants’ facial appearance (attractiveness and trustworthiness) on judicial decisions in two different swindles. We selected the following four categories of faces by manipulating facial attractiveness and trustworthiness simultaneously: the attractive and trustworthy face; the attractive but untrustworthy face; the unattractive but trustworthy face; and the unattractive and untrustworthy face. A total of six hundred and sixty-three participants across two studies were asked to make conviction-related judgments and penalty-related decisions for the defendants after they were randomly assigned to one of the four categories of faces. In Experiment 1, we used a blind-date swindle and found a “beauty penalty” for physically attractive defendants among females. Specifically, female participants were more likely to issue a guilty verdict to better-looking male defendants. Additionally, this “beauty-penalty effect” was merely observed in the untrustworthy condition. In Experiment 2, we used a telecommunication swindle, and the results showed that facial trustworthiness significantly predicted punishment magnitude and sentence decisions. Moreover, an exploratory analysis revealed that the disgust evoked by the faces partially mediated the relationship between facial trustworthiness and the assignment of criminal penalties. Taken together, these findings indicated that facial attractiveness and trustworthiness played different roles in judicial decisions. Importantly, the effect of facial attractiveness on judicial decisions differed as the detailed criminal circumstances of the offenses changed.

We examine the association between financial analysts’ industrial concentration and the quality of their earnings forecasts. We find that analysts’ forecast quality, measured by forecast accuracy, forecast informativeness, and forecast timeliness, is positively associated with analysts’ industrial concentration on firm coverage, suggesting that allocation of effort and resources to the concentrated industries helps promote the quality of earnings forecasts. We also find that the positive relation of analysts’ industrial concentration with forecast accuracy and informativeness (forecast timeliness) is more (less) pronounced for firms faced with fiercer industrial product market competition, higher firm-specific risk, and/or higher information opacity. Overall, our results highlight the importance of analysts’ industrial concentration in contributing to the quality of their earnings forecasts.

We examine the association of insider ownership with financial analysts’ forecast accuracy and dispersion in a sample of U.S. dual-class firms. Insider ownership exerts two effects: a positive incentive effect and a negative entrenchment effect. The lack of significant findings in prior research regarding the association between insider ownership and forecast accuracy may be attributable to the offsetting forces of these two effects. Using a comprehensive hand-collected sample of U.S. firms that maintain more than one class of common stock, we are able to disentangle incentive and entrenchment effects which are confounded in single-class firms. We find that disproportionate insider control is negatively associated with forecast accuracy and positively associated with forecast dispersion. Moreover, insider cash flow rights (insider voting rights) are positively (negatively) associated with forecast accuracy and negatively (positively) associated with forecast dispersion, consistent with incentive-alignment and entrenchment effects of ownership affecting financial analysts’ forecasting environment in opposite directions.

PurposeThe purpose of this paper is to examine whether financial analysts are sensitive to voluntary earning disclosures.Design/methodology/approachThe paper is based on a literature review of the relationship between analysts' behaviour and corporate disclosures. It is assumed first that analyst coverage both influences and is influenced by voluntary earning disclosures, and that second, French managers are expected to make voluntary disclosures in order to reduce market uncertainty. To test these hypotheses, a simultaneous equation model and an ordinary least square regression framework were estimated on a sample of 154 French‐listed firms between 1998 and 2001.FindingsThe results show that voluntary earning disclosures positively influence analyst coverage decision. They also show that voluntary disclosures improve the accuracy of analyst forecasts and reduce market uncertainty.Research limitations/implicationsThe paper does not cover all forms of corporate voluntary disclosures.Practical implicationsThe findings suggest that corporate disclosure policy is likely to change financial analysts' behaviour. The results are useful to both managers, wishing to meet market expectations and, to investors wishing to invest in richer informational environment firms.Originality/valueThis paper provides original results about the role of analysts in France as information intermediaries. These analysts pay little attention to French firms with a poor information environment in which minority shareholders are less inclined to ask for costly analyst coverage.

Facial trustworthiness is thought to underlie social judgements in face perception, though it is unclear whether trustworthiness judgements are based on stable facial attributes. If this were the case, we could expect a genetic component of facial trustworthiness. From facial photographs of a large sample of identical and nonidentical twins and siblings (1320 individuals), we tested for genetic variation in facial trustworthiness and genetic covariation with several stable facial attributes, including facial attractiveness, two measures of masculinity, and facial width-to-height ratio. We found a significant genetic component of facial trustworthiness in men (but not women), and significant genetic correlations with the stable morphological facial traits of attractiveness (positive), perceived masculinity (negative), and facial width-to-height ratio (negative). However, there was no significant genetic or shared environmental correlation between facial trustworthiness and an objective masculinity score based on facial landmark coordinates, despite there being a significant phenotypic correlation. Our results suggest that heritable facial traits influence trustworthiness judgements.

Phd Thesis: International Perspective: The Impact of Corporate Social Responsibility Reports on Analysts' Coverage and Forecast Properties: Evidence from Ft Global 500

Prior studies find that analysts tend to bias their forecasts upward in poor information environments and downward in rich information environments, consistent with attempts to curry favor with management. We find that investors anticipate this behavior by reducing their response to upward forecasts in poor information environments and downward forecasts in rich information environments. Using Hugon and Muslu’s measure of analyst conservatism as an ex ante indicator of individual analysts’ forecast bias tendencies, we show that the stronger return response they find to conservative analysts’ forecast revisions is restricted to poor information environments, where optimistic analyst bias is prevalent. Our results suggest that analysts pay a price in market influence when their forecasts reinforce analysts’ typical forecast bias for the firm’s information environment. Conversely, analysts whose forecasts conflict with the typical bias for the firm are rewarded with larger than average return responses.

Can information environment of a firm explain home bias in analysts’ recommendations? Can the extent of agency problems explain optimism difference between foreign and local analysts? This paper answers these questions by documenting the effect of information environment on home bias in analysts’ recommendations. Using a large data of analysts’ recommendations from Asian emerging markets, we show that local analysts issue more optimistic recommendations than their foreign counterparts. However, optimism difference between the two groups is greater for firms with poor information environment. Our results show that optimism difference between the two groups is more than twice as much in firms with poor information environment than in firms with better information environment. We argue that poor information environment pose greater information asymmetries to foreign analysts regarding local firms relative to local analysts. As a result, we expect them to be less optimistic in their recommendations relative to local analysts. However, for firms with better information environment, foreign analysts face less information asymmetries. As a result, they are relatively more optimistic (less pessimistic) in their recommendations, thereby causing convergence in optimism level between foreign and local analysts.

T HIS study empirically examines the effects of increases in the level and enforcement of insider-trading regulations in the 1980s on corporate insiders.1 The main goal of the insider-trading regulations is to prevent insiders from trading on the basis of material, nonpublic corporate information. In addition, regulations require that insiders report their transactions to the Securities and Exchange Commission (SEC) and refrain from generating short-term profits by trading in their own firms' stocks. Regulations also prohibit insiders from short selling the securities of their firms.

Difference Analysis in Bank Risk Attitudes: A Triple Perspectives of Bank Managers, Financial Analysts, and Credit Raters

This study investigates the relationship between corporate ethics and the information intermediation element of public companies’ information environment. Drawing on the well-established virtue, deontological, and consequential ethical theories, we predict that higher corporate ethics standards have a positive effect on financial analysts’ behavior and earnings forecasts. Using a sample of 5276 firm-year observations from 780 publicly listed US companies, multivariate regression analyses document a significant positive association between company’s level of ethical commitment and analyst coverage and forecast accuracy. Furthermore, the results show that firms with fewer incidents of ethical misconduct are associated with higher analyst consensus. These findings hold across a battery of robustness tests and indicate that a firm’s ethical commitment enhances its corporate information environment and allows financial analysts to play a more effective intermediary role in capital markets.

Facial appearance of candidates has been linked to real election outcomes. Here we extend these findings by examining the contributions of attractiveness and trustworthiness in male faces to perceived votability. We first use real faces to show that attractiveness and trustworthiness are positively and independently related to perceptions of good leadership (rating study). We then show that computer graphic manipulations of attractiveness and trustworthiness influence choice of leader (experiments 1 and 2). Finally, we show that changing context from wartime to peacetime can affect which face receives the most votes. Attractive faces were relatively more valued for wartime and trustworthy faces relatively more valued for peacetime (experiments 1 and 2). This pattern suggests that attractiveness, which may indicate health and fitness, is perceived to be a useful attribute in wartime leaders, whereas trustworthiness, which may indicate prosocial traits, is perceived to be more important during peacetime. Our studies highlight the possible role of facial appearance in voting behaviour and the role of attributions of attractiveness and trust. We also show that there may be no general characteristics of faces that make them perceived as the best choice of leader; leaders may be chosen because of characteristics that are perceived as the best for leaders to possess in particular situations.