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Analyst Earnings Forecasts, Individual Investors’Expectations and Trading Volume: An Experimental Approach

Author

Listed:
  • Thanh Huong Dinh

    (Accenture France, University of Paris East Créteil Val-de-Marne)

  • Jean-François Gajewski

    (IREGE, University Savoie Mont Blanc)

  • Duc Khuong Nguyen

    (IPAG Lab, IPAG Business School)

Abstract

This paper studies how analysts’ earnings forecasts affect investors’ expectations and trading decisions. From an experiment built on a double-auction market, we find that investors partially incorporate the forecasting information in their expectations and trading decisions. Investors partly correct for analysts’ forecast errors and their expectations are less heterogeneous than analysts’ forecasts. As for the trading volume, it is negatively driven by the heterogeneity of the analysts’ forecasts but positively by the size of the forecast errors.

Suggested Citation

  • Thanh Huong Dinh & Jean-François Gajewski & Duc Khuong Nguyen, 2016. "Analyst Earnings Forecasts, Individual Investors’Expectations and Trading Volume: An Experimental Approach," Bankers, Markets & Investors, ESKA Publishing, issue 141, pages 20-34, March-Apr.
    • Handle: RePEc:rbq:journl:i:141:p:20-34
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    Keywords

    Analysts’ Forecasts; Investor Expectations; Trading Volume; Experimental Asset Market; Earnings Announcement;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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