Analysts earnings forecasts

Coexistence and dynamics of overconfidence and strategic incentives

Peter de Goeij, Katrien Bosquet, Kristien Smedts

Research output: Contribution to journalArticleScientificpeer-review

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
Original languageEnglish
Pages (from-to)307-322
JournalAccounting and Business Research
Volume45
Issue number3
DOIs
Publication statusPublished - 2015

Fingerprint

Overconfidence
Analysts' earnings forecasts
Incentives
Private information
Coexistence
Earnings forecasts
Analysts
Financial analysts
Two-stage model
Decision process
Empirical evidence
Weighting
Public information

Keywords

  • financial analysts
  • earnings forecasts
  • overconfidence
  • conflicts of interest

Cite this

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Analysts earnings forecasts : Coexistence and dynamics of overconfidence and strategic incentives. / de Goeij, Peter; Bosquet, Katrien; Smedts, Kristien.

In: Accounting and Business Research, Vol. 45, No. 3, 2015, p. 307-322.

Research output: Contribution to journalArticleScientificpeer-review

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