Abstract
This paper primarily studies the effects of irrational factors (investor sentiment) on analysts' forecast bias and the impacts of rational factors (conflicts of interest) on the sentiment-forecast bias nexus. Empirical findings show that investor sentiment does have significant positive impacts on analysts' forecast bias. This effect still holds after controlling for rational factors (commission relationship, underwriting relationship and reputation factors). Moreover, investor sentiment has more notable impacts on analysts' forecast bias for those who are under the pressure of conflicts of interest, particularly for the commission relationship. The stronger the commission relationship is, the greater the analysts' forecast bias. Our results provide new insight into the mechanism through which investor sentiment affects returns.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.