U.S. Analyst Regulation and the Earnings Forecast Bias Around the World

European Financial Management, Forthcoming

Posted: 19 May 2012

See all articles by Armen Hovakimian

Armen Hovakimian

Baruch College - Zicklin School of Business

Ekkachai Saenyasiri

Hong Kong University of Science & Technology (HKUST) - Department of Finance

Date Written: April 18, 2012

Abstract

We examine the spillover effects of the Global Analyst Research Settlement (or Global Settlement) on analysts’ earnings forecasts in 40 developed and emerging markets. Prior to the Global Settlement, analysts generally made overly optimistic forecasts, this bias tending to be higher in countries with less investor protection. This forecast bias declined significantly after passage of the Global Settlement, the spillover effect being stronger for countries with lower investor protection. The spillover effect is also stronger for countries with a more significant presence of the analysts of the 12 banks directly involved in the Global Settlement.

Keywords: analyst regulation, investor protection, cross-country spillover, analyst forecast bias, analyst conflicts of interest

JEL Classification: G15, G24, G28, G29, G38

Suggested Citation

Hovakimian, Armen and Saenyasiri, Ekkachai, U.S. Analyst Regulation and the Earnings Forecast Bias Around the World (April 18, 2012). European Financial Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2062567

Armen Hovakimian

Baruch College - Zicklin School of Business ( email )

One Bernard Baruch Way
Box B10-225
New York, NY 10010
United States
646-312-3490 (Phone)
646-312-3451 (Fax)

HOME PAGE: http://zicklin.baruch.cuny.edu/faculty-profile/armen-hovakimian/

Ekkachai Saenyasiri (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Department of Finance ( email )

Clear Water Bay, Kowloon
Hong Kong

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