Analysts earnings forecasts: Coexistence and dynamics of overconfidence and strategic incentives
de Goeij,Peter Bosquet,Katrien Smedts,Kristien
de Goeij,Peter
Bosquet,Katrien
Smedts,Kristien
Abstract
This paper formulates a two-stage model to capture the decision process of financial analysts when issuing earnings forecasts. Our model extends the model of Chen and Jiang [(2005). Analysts’ weighting of private and public information. Review of Financial Studies, 19 (1), 319–355], by allowing for a distortion of forecasts independent of whether an analyst has private information. Using quarterly earnings forecasts, we provide empirical evidence on the coexistence of overconfidence and strategic incentives. Financial analysts overweight their private information and at the same time strategically inflate their forecast
Description
Date
2015
Journal Title
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Volume Title
Publisher
Research Projects
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Keywords
financial analysts, earnings forecasts, overconfidence, conflicts of interest, G14 - Information and Market Efficiency ; Event Studies ; Insider Trading, G17 - Financial Forecasting and Simulation, G24 - Investment Banking ; Venture Capital ; Brokerage ; Ratings and Ratings Agencies
Citation
de Goeij, P, Bosquet, K & Smedts, K 2015, 'Analysts earnings forecasts : Coexistence and dynamics of overconfidence and strategic incentives', Accounting and Business Research, vol. 45, no. 3, pp. 307-322. https://doi.org/10.1080/00014788.2015.1009359