Cultural Biases in Equity Analysis

60 Pages Posted: 19 Apr 2018 Last revised: 27 Nov 2019

See all articles by Vesa Pursiainen

Vesa Pursiainen

University of St. Gallen; University of Zurich - Department of Banking and Finance

Date Written: October 21, 2019


A more positive cultural trust bias by an equity analyst's country of origin toward a firm's headquarter country is associated with significantly more positive stock recommendations, controlling for analyst-month and firm-month fixed effects. The cultural bias effect is stronger for eponymous firms whose names mention their home country. The bias effect varies over time, increasing with negative sentiment. I find evidence of a negative North-South bias emerging during the European debt crisis, a UK-Europe divergence amid Brexit, and a Franco-British bias during the Iraq war. The share price reaction to buy recommendations by more positively biased analysts is weaker.

Keywords: cultural bias, trust, analyst recommendation, salience, sentiment

JEL Classification: A13, G02, G20, G24, D83

Suggested Citation

Pursiainen, Vesa, Cultural Biases in Equity Analysis (October 21, 2019). Available at SSRN: or

Vesa Pursiainen (Contact Author)

University of St. Gallen ( email )

Swiss Institute of Banking and Finance
Unterer Graben 21
St.Gallen, 9000

University of Zurich - Department of Banking and Finance ( email )

Plattenstrasse 14
Z├╝rich, 8032

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics