Cultural Biases in Equity Analysis

121 Pages Posted: 19 Apr 2018 Last revised: 18 Jun 2021

See all articles by Vesa Pursiainen

Vesa Pursiainen

University of St. Gallen; Swiss Finance Institute

Date Written: June 8, 2021


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. The cultural bias effect is stronger for eponymous firms whose names mention their home country and varies over time, increasing with negative sentiment. I find evidence of a negative North-South bias during the European debt crisis and UK-Europe divergence amid Brexit. Share price reactions to recommendations by more biased analysts are weaker, and more biased recommendations are worse at predicting monthly stock returns. More positively biased analysts also assign higher target prices.

Keywords: cultural bias, trust, analyst recommendation, stock returns

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

Suggested Citation

Pursiainen, Vesa, Cultural Biases in Equity Analysis (June 8, 2021). Journal of Finance, Forthcoming, 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

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4

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