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Analyst Target Price Optimism Around the World

46 Pages Posted: 29 Aug 2012 Last revised: 27 Jan 2014

Mark T Bradshaw

Boston College

Alan Guoming Huang

University of Waterloo

Hongping Tan

York University - Schulich School of Business

Date Written: January 26, 2014


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.

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

JEL Classification: G24, N20, K40

Suggested Citation

Bradshaw, Mark T 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: or

Mark T 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
519-888 4567 ext. 36770 (Phone)

Hongping Tan (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3

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