Analyst optimism before and after the financial crisis of 2008

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi Mörä, Mikko 2013-04-03T01:30:17Z 2013-04-03T01:30:17Z 2013
dc.description.abstract This thesis examines whether the documented analyst optimism has decreased after the financial crisis of 2008. Prior research reports overestimation bias on average in analysts' earnings forecasts. After the financial crisis, the U.S. financial industry has undergone changes that could affect analysts' incentives to bias their earnings forecasts. Furthermore, recent studies propose that there is a demand for more conservative sell-side analysis, which could be exaggerated after the crisis. First, I examine the proportion of optimistic earnings forecasts of all forecasts before the financial crisis and after the crisis. Second, I conduct a regression analysis to capture the effect of the crisis to forecast errors, separate from other possible reasons. The data covers all U.S. companies with available earnings forecast data from the first quarter of 2004 to the last quarter of 2011, excluding the quarters during the financial crisis. The sample is pessimistic on average. 39% of earnings forecasts were optimistic during the time span, excluding the quarters during the crisis. However, this study finds evidence that the financial crisis has contributed to further decrease in analysts' optimism in earnings forecasts. The proportion of optimistic forecasts is smaller after the crisis than before the crisis. Furthermore, the regression tests show that analysts are less optimistic after the crisis, independently from other possible reasons. The findings thus suggest that analysts are generally less optimistic after the financial crisis. Moreover, forecast errors are larger than before the crisis. However, this study does not examine the reasons behind the decrease in optimism. en
dc.format.extent 73
dc.language.iso en en
dc.title Analyst optimism before and after the financial crisis of 2008 en
dc.type G2 Pro gradu, diplomityö fi Kauppakorkeakoulu fi School of Business en
dc.contributor.department Department of Accounting en
dc.contributor.department Laskentatoimen laitos fi
dc.subject.keyword analysts' forecasts
dc.subject.keyword bias
dc.subject.keyword financial crisis
dc.subject.keyword optimism
dc.identifier.urn URN:NBN:fi:aalto-201304041868
dc.type.dcmitype text en
dc.programme.major Accounting en
dc.programme.major Laskentatoimi fi
dc.type.ontasot Master's thesis en
dc.type.ontasot Pro gradu tutkielma fi
dc.subject.helecon laskentatoimi
dc.subject.helecon accounting
dc.subject.helecon tulos
dc.subject.helecon return
dc.subject.helecon ennusteet
dc.subject.helecon forecasts
dc.subject.helecon talousnäkymät
dc.subject.helecon economic outlook
dc.subject.helecon talouskriisi
dc.subject.helecon economic crisis
dc.subject.helecon psykologia
dc.subject.helecon psychology
dc.ethesisid 13146 2013-02-08
dc.location P1 I

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