Is cognitive bias really present in analyst forecasts? The role of investor sentiment

This paper analyses four key markets within the European context. In this context, where the level of analyst coverage is lower than in the US setting, we aim to ascertain whether the origin of optimism in analyst forecasts in these markets is mainly strategic or whether it also contains an element...

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Detalles Bibliográficos
Autores: Corredor Casado, María Pilar, Ferrer Zubiate, Elena, Santamaría Aquilué, Rafael
Tipo de recurso: artículo
Estado:Versión aceptada para publicación
Fecha de publicación:2014
País:España
Institución:Universidad Pública de Navarra
Repositorio:Academica-e. Repositorio Institucional de la Universidad Pública de Navarra
OAI Identifier:oai:academica-e.unavarra.es:2454/18659
Acceso en línea:https://hdl.handle.net/2454/18659
Access Level:acceso abierto
Palabra clave:Analyst forecasts
Optimism
Strategic Behaviour
Investor sentiment
Cognitive Bias
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spelling Is cognitive bias really present in analyst forecasts? The role of investor sentimentCorredor Casado, María PilarFerrer Zubiate, ElenaSantamaría Aquilué, RafaelAnalyst forecastsOptimismStrategic BehaviourInvestor sentimentCognitive BiasThis paper analyses four key markets within the European context. In this context, where the level of analyst coverage is lower than in the US setting, we aim to ascertain whether the origin of optimism in analyst forecasts in these markets is mainly strategic or whether it also contains an element of cognitive bias. Despite the fact that forecast errors lack the explanatory power to account for a significant percentage of the relationship between market sentiment and future stock returns, our new tests based on selection bias (SB1 and SB2), in conjunction with an analysis of abnormal trading volume, confirm the presence of both cognitive bias and strategic behaviour in analyst forecasts. This shows that, although regulation can reduce analyst optimism bias, the benefits are constrained by the fact that optimism bias is partly associated with cognitive bias.This paper has received financial support from the Spanish Ministry of Science and Innovation (ECO2009-12819) and from the Spanish Ministry of Economy and Competitiveness (ECO2012-35946-C02-01). Elena Ferrer would also like to thank the Scientific Research Grant from Fundación Banco Herrero 2012.ElsevierGestión de EmpresasEnpresen Kudeaketa2014info:eu-repo/semantics/articleinfo:eu-repo/semantics/acceptedVersionapplication/pdfhttps://hdl.handle.net/2454/18659reponame:Academica-e. Repositorio Institucional de la Universidad Pública de Navarrainstname:Universidad Pública de NavarraInglésinfo:eu-repo/grantAgreement/MICINN//ECO2009-12819-C03-01info:eu-repo/grantAgreement/MINECO//ECO2012-35946-C02-01© 2014 Elsevier Ltd. The manuscript version is made available under the CC BY-NC-ND 4.0 license.https://creativecommons.org/licenses/by-nc-nd/4.0/info:eu-repo/semantics/openAccessoai:academica-e.unavarra.es:2454/186592026-06-17T12:41:47Z
dc.title.none.fl_str_mv Is cognitive bias really present in analyst forecasts? The role of investor sentiment
title Is cognitive bias really present in analyst forecasts? The role of investor sentiment
spellingShingle Is cognitive bias really present in analyst forecasts? The role of investor sentiment
Corredor Casado, María Pilar
Analyst forecasts
Optimism
Strategic Behaviour
Investor sentiment
Cognitive Bias
title_short Is cognitive bias really present in analyst forecasts? The role of investor sentiment
title_full Is cognitive bias really present in analyst forecasts? The role of investor sentiment
title_fullStr Is cognitive bias really present in analyst forecasts? The role of investor sentiment
title_full_unstemmed Is cognitive bias really present in analyst forecasts? The role of investor sentiment
title_sort Is cognitive bias really present in analyst forecasts? The role of investor sentiment
dc.creator.none.fl_str_mv Corredor Casado, María Pilar
Ferrer Zubiate, Elena
Santamaría Aquilué, Rafael
author Corredor Casado, María Pilar
author_facet Corredor Casado, María Pilar
Ferrer Zubiate, Elena
Santamaría Aquilué, Rafael
author_role author
author2 Ferrer Zubiate, Elena
Santamaría Aquilué, Rafael
author2_role author
author
dc.contributor.none.fl_str_mv Gestión de Empresas
Enpresen Kudeaketa
dc.subject.none.fl_str_mv Analyst forecasts
Optimism
Strategic Behaviour
Investor sentiment
Cognitive Bias
topic Analyst forecasts
Optimism
Strategic Behaviour
Investor sentiment
Cognitive Bias
description This paper analyses four key markets within the European context. In this context, where the level of analyst coverage is lower than in the US setting, we aim to ascertain whether the origin of optimism in analyst forecasts in these markets is mainly strategic or whether it also contains an element of cognitive bias. Despite the fact that forecast errors lack the explanatory power to account for a significant percentage of the relationship between market sentiment and future stock returns, our new tests based on selection bias (SB1 and SB2), in conjunction with an analysis of abnormal trading volume, confirm the presence of both cognitive bias and strategic behaviour in analyst forecasts. This shows that, although regulation can reduce analyst optimism bias, the benefits are constrained by the fact that optimism bias is partly associated with cognitive bias.
publishDate 2014
dc.date.none.fl_str_mv 2014
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/acceptedVersion
format article
status_str acceptedVersion
dc.identifier.none.fl_str_mv https://hdl.handle.net/2454/18659
url https://hdl.handle.net/2454/18659
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv info:eu-repo/grantAgreement/MICINN//ECO2009-12819-C03-01
info:eu-repo/grantAgreement/MINECO//ECO2012-35946-C02-01
dc.rights.none.fl_str_mv © 2014 Elsevier Ltd. The manuscript version is made available under the CC BY-NC-ND 4.0 license.
https://creativecommons.org/licenses/by-nc-nd/4.0/
info:eu-repo/semantics/openAccess
rights_invalid_str_mv © 2014 Elsevier Ltd. The manuscript version is made available under the CC BY-NC-ND 4.0 license.
https://creativecommons.org/licenses/by-nc-nd/4.0/
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:Academica-e. Repositorio Institucional de la Universidad Pública de Navarra
instname:Universidad Pública de Navarra
instname_str Universidad Pública de Navarra
reponame_str Academica-e. Repositorio Institucional de la Universidad Pública de Navarra
collection Academica-e. Repositorio Institucional de la Universidad Pública de Navarra
repository.name.fl_str_mv
repository.mail.fl_str_mv
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