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Analyst earnings forecasts, individual investors' expectations and trading volume: An experimental approach

Author

Listed:
  • Duc Khuong Nguyen

    (EMLV - École de management Léonard de Vinci)

  • Thanh Huong Dinh

    (IRG - Institut de Recherche en Gestion - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel)

  • Jean-François Gajewski

    (MAGELLAN - Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon)

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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Duc Khuong Nguyen & Thanh Huong Dinh & Jean-François Gajewski, 2016. "Analyst earnings forecasts, individual investors' expectations and trading volume: An experimental approach," Post-Print hal-04732872, HAL.
  • Handle: RePEc:hal:journl:hal-04732872
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    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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