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Negativity Bias of Analyst Forecasts

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  • Yuk Ying (Candie) Chang
  • Wei Hao

Abstract

In contrast to the conventional view that analysts forecast optimistically, we provide evidence of the Negativity Bias. Analysts show negative forecast bias associated with their relative local income growth, whether the growth is positive or negative. The bias is stronger for negative growth than for positive growth. The negative bias also directly affects the bias of the next analysts of the same and peer earnings being forecast. Our results suggest non-fundamental factors at work.

Suggested Citation

  • Yuk Ying (Candie) Chang & Wei Hao, 2022. "Negativity Bias of Analyst Forecasts," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 23(2), pages 175-188, May.
    • Handle: RePEc:taf:hbhfxx:v:23:y:2022:i:2:p:175-188
    DOI: 10.1080/15427560.2020.1865353
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    Cited by:

    1. Christophe, Stephen E. & Hsieh, Jim & Lee, Hun, 2024. "Reputation and recency: How do aggressive short sellers assess ESG-Related Information?," Journal of Business Research, Elsevier, vol. 180(C).

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