Abstract

http://ssrn.com/abstract=2137291
 


 



Analyst Target Price Optimism Around the World


Mark Thomas Bradshaw


Boston College

Alan Guoming Huang


University of Waterloo

Hongping Tan


University of Waterloo

January 26, 2014

Midwest Finance Association 2013 Annual Meeting Paper

Abstract:     
We examine the determinants of the well-documented optimism in analysts’ target prices using unique analyst location data for 11,633 analysts located in 44 countries covering 17,353 firms around the world. We construct both ex ante and ex post optimism measures to explore the determinants of target price optimism. We find that target price optimism is positively associated with proxies for analysts’ conflicts of interest, but negatively associated with country-level institutional infrastructure as characterised by strong investor protection, effective legal enforcement and transparent financial environment. Our results highlight the importance of institutional infrastructure of a country in moderating biased analyst research.

Number of Pages in PDF File: 46

Keywords: analyst, target price, optimism, conflicts of interest, investor protection, financial transparency

JEL Classification: G24, N20, K40

working papers series


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Date posted: August 29, 2012 ; Last revised: January 27, 2014

Suggested Citation

Bradshaw, Mark Thomas and Huang, Alan Guoming and Tan, Hongping, Analyst Target Price Optimism Around the World (January 26, 2014). Midwest Finance Association 2013 Annual Meeting Paper. Available at SSRN: http://ssrn.com/abstract=2137291 or http://dx.doi.org/10.2139/ssrn.2137291

Contact Information

Mark Thomas Bradshaw
Boston College ( email )
140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
Alan G. Huang
University of Waterloo ( email )
School of Accounting and Finance
Waterloo, Ontario N2L 3G1
Canada
519-888 4567 ext. 36770 (Phone)
Hongping Tan (Contact Author)
University of Waterloo ( email )
School of Accounting and Finance
Waterloo, Ontario N2L 3G1
Canada
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