Do Lottery Characteristics Matter for Analysts’ Forecast Behavior?

51 Pages Posted: 12 Jan 2021

See all articles by Mei-Chen Lin

Mei-Chen Lin

National Taipei University

J. Jimmy Yang

Oregon State University - College of Business

Date Written: December 9, 2020

Abstract

This study examines the effect of lottery characteristics on analysts’ earnings forecasts. We find that analysts are more optimistic for lottery firms. The optimism of earnings forecast decreases with analysts’ general and firm-specific experience. Information uncertainty would enhance the effect of lottery characteristics on analysts’ earnings forecast bias. Market states and investor sentiment positively affect the effect of lottery characteristics on analyst optimism. Moreover, the level of optimism on lottery stocks increases during economic expansion. Our findings suggest that behavioral biases, rather than rational incentives, explain the optimism of analysts’ earnings forecasts for lottery stocks.

Keywords: lottery stocks; analyst; earnings forecast optimism; behavioral bias

Suggested Citation

Lin, Mei-Chen and Yang, J. Jimmy, Do Lottery Characteristics Matter for Analysts’ Forecast Behavior? (December 9, 2020). Available at SSRN: https://ssrn.com/abstract=3746097 or http://dx.doi.org/10.2139/ssrn.3746097

Mei-Chen Lin

National Taipei University ( email )

Dept. of Finance
Taipei, Taiwan 100
Taiwan

J. Jimmy Yang (Contact Author)

Oregon State University - College of Business ( email )

School of Accounting, Finance, and Information Sys
426 Austin Hall
Corvallis, OR 97331
United States
541-737-6005 (Phone)
541-737-4890 (Fax)

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