BazEkon - The Main Library of the Cracow University of Economics

BazEkon home page

Main menu

Author
Radke Michał (University of Lodz, Poland)
Title
Are Analysts Really Overly Optimistic When Preparing Recommendations?
Source
Humanities and Social Sciences, 2023, vol. 30, nr 1, s. 101-118, tab., bibliogr. 67 poz.
Keyword
Analiza giełdowa, Giełda, Analiza rynku
Stock exchange analysis, Stock exchange, Market analysis
Note
summ.
Abstract
The main aim of this research was to estimate the level and distribution of optimism among analysts preparing stock market recommendations. A secondary goal was to analyze the relationship between optimism and socio-demographic variables such as age, education, and professional experience. The author used the Received Life Orientation Test (LOT-R) to test optimism. At the same time, the paper attempted to compare the results of optimism research using the psychological tests carried out by the author with previous research that perceived optimism as the difference between forecast and reality. According to the survey, individual investors in Poland are characterized by an average level of optimism of 14.38 points according to the LOT-R test, where the average level of optimism ranges from 14 to 18 points. The research did not find that the level of optimism was influenced by such socio- -demographic characteristics as age, experience, or education. (original abstract)
Full text
Show
Bibliography
Show
  1. Agrawal, A., Chen M.A. (2008). Do Analyst Conflicts Matter? Evidence from Stock Recommendations. "The Journal of Law and Economics", Vol. 51, No. 3.
  2. Ates, S., Coskun, A., Sahin, M.A., Demircan, M.L. (2016). Impact of financial literacy on the behavioral biases of individual stock investors: evidence from Borsa Istanbul. "Business and Economics Research Journal", Vol. 7, No. 3. DOI: 10.20409/berj.2016321805.
  3. Baker, H.K., Filbeck, G., Nofsinger, J.R. (2021). Finanse behawioralne: co każdy powinien wiedzieć. Warsaw: Wydawnictwo Naukowe PWN.
  4. Barberis, N., Shleifer, A., Vishny, R. (1998). A Model of Investor Sentiment. "Journal of Financial Economics", Vol. 49, No. 3.
  5. Bosquet, K., de Goeij, P., Smedts, K. (2014). Gender heterogeneity in the sell-side analyst recommendation issuing process. "Finance Research Letters", Vol. 11, No. 2. DOI: 10.1016/j.frl.2013.11.004.
  6. Brunnermeier, M.K., Parker, J.A. (2005). Optimal Expectations. "American Economic Review", Vol. 95, No. 4.
  7. Brycz, B., Dudycz, T., Włodarczyk, K. (2021). Are Analysts Really Optimistic in Their Stock Recommendations? The Case of the Polish Capital Market. "Emerging Markets Finance and Trade", Vol. 57, No. 13. DOI: 10.1080/1540496X.2019.1694886.
  8. Buxbaum, M., Schultze, W., Tiras, S.L. (2019). Target Price Optimism, Investor Sentiment, and the Informativeness of Target Prices. "SSRN Electronic Journal".
  9. Cano-García, F.J., Sanduvete-Chaves, S., Chacón-Moscoso, S., Rodríguez-Franco, L., García- -Martínez, J., Antuña-Bellerín, M.A., Pérez-Gil, J.A. (2015). Factor structure of the Spanish version of the Life Orientation Test-Revised (LOT-R): Testing several models. "International journal of clinical and health psychology", Vol. 15, No. 2. DOI: 10.1016/j.ijchp.2015.01.003.
  10. Chakraborty, R. (2016). Dimensional Analysis of Life Orientation in Higher Secondary School Students. "International Journal of Research in Humanities and Social Studies", Vol. 3, No. 2.
  11. Chen, J., Hong, H., Stein, J.C. (2002). Breadth of ownership and stock returns. "Journal of Financial Economics", Vol. 66, No. 23.
  12. Collingwood, J. (2018). Realism and Optimism: Do You Need Both?, "Psych Central" [Access: 20.07.2022]. Access on the internet: https://psychcentral.com/lib/realism-and-optimism- do-you-need-both.
  13. Coval, J.D., Thakor, A.V. (2005). Financial intermediation as a beliefs-bridge between optimists and pessimists. "Journal of Financial Economics", Vol. 75, No. 3. DOI: 10.1016/ j.jfineco.2004.02.005.
  14. Cowen, A., Groysberg, B., Healy, P. (2006) Which types of analyst firms are more optimistic?. "Journal of Accounting and Economics", Vol. 41, No. 1-2. DOI: 10.1016/j.jacceco. 2005.09.001.
  15. Czerw, A. (2009). Optymizm. Perspektywa psychologiczna. Gdańsk: Gdańskie Wydawnictwo Psychologiczne.
  16. Dąbrowski, P. (2013). Huraoptymizm rekomendacji maklerskich w okresie giełdowej dekoniunktury. "Studia Ekonomiczne", Vol. 174.
  17. De Bondt, W.P.M. (1993). Betting on trends: Intuitive forecasts of financial risk and return. "International Journal of Forecasting", Vol. 9, No. 3. DOI: 10.14718/ACP.2017.20.1.3.
  18. Demirakos, E.G., Strong, N.C., Walker M. (2010). Does Valuation Model Choice Affect Target Price Accuracy?. "European Accounting Review", Vol. 19, No. 1. DOI: /10.1080/ 09638180902990630.
  19. Drake, M.S., Myers L.A. (2011). Analysts' accrual-related over-optimism: do analyst characteristics play a role?. "Review of Accounting Studies", Vol. 16, No. 1. DOI: 10.1007/s11142-009-9118-3.
  20. Ertimur, Y., Zhang, F., Muslu, V. (2010). Why are Recommendations Optimistic? Evidence from Analysts' Coverage Initiations. "SSRN Electronic Journal".
  21. Gakhar, D. (2019). Role of Optimism Bias and Risk Attitude on Investment Behaviour. "Theoretical Economics Letters", Vol. 9. DOI: 10.4236/tel.2019.94056.
  22. Glaesmer, H., Rief, W., Martin, A., Mewes, R., Brahler, E., Zenger, M., Hinz, A. (2012). Psychometric properties and population-based norms of the Life Orientation Test Revised (LOT-R). "British Journal of Health Psychology", Vol. 17. DOI: 10.1111/j.2044-8287. 2011.02046.x.
  23. Glaum, M., Friedrich, N. (2006). After the "Bubble": Valuation of Telecommunications Companies by Financial Analysts. "Journal of International Financial Management and Accounting", Vol. 17, No. 2.
  24. Gleason, C.A., Johnson W.B., Li H. (2013). Valuation Model Use and the Price Target Performance of Sell-Side Equity Analysts*: Valuation Model Use and Price Target Performance. "Contemporary Accounting Research", Vol. 30, No. 1. DOI: 10.1111/j.1911-3846.2011.01142.x.
  25. Hackbarth, D. (2008). Managerial Traits and Capital Structure Decisions. "Journal of Financial and Quantitative Analysis", Vol. 43, No. 4. DOI: 0.1017/S002210900001437X.
  26. Heaton, J.B. (2002). Managerial Optimism and Corporate Finance, "Financial Management", Vol. 31, No. 2.
  27. Hilary, G., Hsu, C., Segal, B., Wang, R. (2016). The bright side of managerial over-optimism. "Journal of Accounting and Economics", Vol. 62. DOI: 10.1016/j.jacceco.2016.04.001.
  28. Hinz, A., Sander, C., Glaesmer, H., Brähler, E., Zenger, M., Hilbert, A., Kocalevent, R.D. (2017). Optimism and pessimism in the general population: Psychometric properties of the Life Orientation Test (LOT-R). "International journal of clinical and health psychology", Vol. 17, No. 2. DOI: 10.1016/j.ijchp.2017.02.003.
  29. Imam, S., Barker, R., Clubb, C. (2008). The Use of Valuation Models by UK Investment Analysts. "European Accounting Review", Vol. 17, No. 3. DOI: 10.1080/09638180802016650.
  30. Imam, S., Chan, J., Shah, S.Z.A. (2013). Equity valuation models and target price accuracy in Europe: Evidence from equity reports, "International Review of Financial Analysis", Vol. 28. DOI: 10.1016/j.irfa.2013.02.008.
  31. Iqbal, N. (2015). Impact of Optimism Bias on Investment Decision: Evidence from Islamabad Stock Exchange, Pakistan. "Research Journal of Finance and Accounting", Vol. 6, No. 19.
  32. Jefferson, A., Bortolotti, L., Kuzmanovic B. (2017). What is unrealistic optimism?. "Consciousness and Cognition", Vol. 50. DOI: 10.1016/j.concog.2016.10.005.
  33. Jurczyński, Z. (2001. Narzędzia Pomiaru w promocji i psychologii zdrowia. Pracowania Testów Psychologicznych Polskiego Towarzystwa Psychologicznego.
  34. Kahneman, D. (2012). Pułapki myślenia: o myśleniu szybkim i wolnym. Warsaw: Media Rodzina.
  35. Kicia, M. (2008). Wpływ myślenia heurystycznego na efektywność decyzji inwestycyjnych na rynku kapitałowym. "Acta Universitatis Lodziensis, Folia Oeconomica", Vol. 218.
  36. King, B.M., Minium, E.W. (2020). Statystyka dla psychologów i pedagogów. Warsaw: Wydawnictwo Naukowe PWN.
  37. Kowalski, M.J., Praźników, J. (2007). Investment Recommendation Optimism - Results of Empirical Research on Polish Capital Market [In:] Information Systems Architecture and Technology: Proceedings of 37th International Conference on Information Systems Architecture and Technology - ISAT 2016 - Part IV, Springer International Publishing, 524, Advances in Intelligent Systems and Computing. DOI: 10.1007/978-3-319-46592- 0_6.
  38. Kreis, S., Molto, A., Bailly, F., Dodoun, S., Fabre, S., Rein, C., Hundry, C., Zenasni, F., Rozenberg, S., Pertuiset, E., Fautrel, B., Gossec, L. (2015). Relationship between optimism and quality of life in patients with two chronic rheumatic diseases: axial spondyloarthritis and chronic low back pain: a cross sectional study of 288 patients. "Health Qual Life Outcomes", Vol. 13, No. 78. DOI: 10.1186/s12955-015-0268-7.
  39. Lai, J.C.L., Yue. X. (2000). Measuring optimism in Hong Kong and mainland Chinese with the revised Life Orientation Test. "Personality and Individual Differences", Vol. 28, No. 4. DOI: 10.1016/S0191-8869(99)00138-5.
  40. Lin, Y., Hu, S., Chen M. (2005). Managerial optimism and corporate investment: Some empirical evidence from Taiwan. "Pacific-Basin Finance Journal", Vol. 13, No. 5.
  41. Macko, A., Tyszka, T. (2005). Przedsiębiorczość i ryzykowanie. "Decyzje", Vol. 4.
  42. Malmendier, U., Tate, G. (2008). Who Makes Acquistions? CEO Overconfidence and the Market's Reaction. "Journal of Financial Economics", Vol. 89, No. 1.
  43. Malska, W., Koziorowska, A. (2015). Wykorzystanie testu t dla pojedynczej próby we wnioskowaniu statystycznym. "Edukacja - Technika - Informatyka", Vol. 3, No. 6.
  44. Marotta, A., Sarno, E., Del Casale, A., Pane, M., Mogna, L., Amoruso, A., Felis, G.E., Fiorio, M. (2019). Effects of Probiotics on Cognitive Reactivity, Mood, and Sleep Quality. "Front. Psychiatry", Vol. 10, No. 164. DOI: 10.3389/fpsyt.2019.00164.
  45. Mola, S., Guidolin, M. (2009). Affiliated mutual funds and analyst optimism. "Journal of Financial Economics", Vol. 93, No. 1. DOI: 10.1016/j.jfineco.2008.06.006.
  46. Ottati, F., Noronha, A.P.P. (2017). Factor structure of the Life Orientation Test-Revised (LOT-R). "Acta Colombiana de Psicología", Vol. 20, No. 1. DOI: 10.14718/ACP. 2017.20.1.3.
  47. Pastusiak R. (2016). Błędy poznawcze i nadmierny optymizm na rynku kapitałowym, "Przedsiębiorczość i Zarządzanie", Vol. 17.
  48. Pastusiak R. (2016). Nadmierny optymizm w wycenach przedsiębiorstw, "Annales Universitatis Mariae Curie-Skłodowska, sectio H, Oeconomia", Vol. 50, No. 4.
  49. Pastusiak R. (2017). Analiza odchyleń wycen przedsiębiorstw w rekomendacjach maklerskich : nadmierny optymizm. "Zeszyty Naukowe Uniwersytetu Szczecińskiego Finanse Rynki Finansowe Ubezpieczenia", Vol. 89.
  50. Pastusiak R. (2018a) Dyskonto wartości przedsiębiorstwa z tytułu nadmiernego optymizmu. Podejście modelowe. "Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu", No. 533.
  51. Pastusiak R. (2018b). Heurystyka nadmiernego optymizmu w wycenach przedsiębiorstw, "Annales Universitatis Mariae Curie-Skłodowska, sectio H, Oeconomia", Vol. 51, No. 6.
  52. Pastusiak, R., Keller, J. (2015). Rekomendacje inwestycyjne a realia gospodarcze: nadmierny optymizm wśród analityków giełdowych. "Ekonomista", nr 6.
  53. Pastusiak, R., Keller, J. (2019). Determinants of occurrence of excessive optimism among analysts of the Warsaw Stock Exchange. "Zbornik radova Ekonomskog fakulteta u Rijeci: časopis za ekonomsku teoriju i praksu/Proceedings of Rijeka Faculty of Economics: Journal of Economics and Business", Vol. 37, No. 1.
  54. Prosad, J.M., Kapoor, S., Sengupta, J. (2015). Behavioral biases of Indian investors: a survey of Delhi-NCR region. "Qualitative Research in Financial Markets", Vol. 7, No. 3. DOI: 10.1108/QRFM-04-2014-0012.
  55. Puri, M., Robinson, D.T. (2007). Optimism and economic choice. "Journal of Financial Economics", Vol. 86.
  56. Riaz, T., Iqbal, H. (2015). Impact of Overconfidence, Illusion of control, Self Control and Optimism Bias on Investors Decision Making; Evidence from Developing Markets Research. "Journal of Finance and Accounting", Vol. 6, No. 11.
  57. Scheier, M.F., Carver, C.S. (1985). Optimism, coping and health: assessment and implications of generalized outcome expectancies. "Health Psychology", Vol. 4. DOI: 10.1037/0278-6133.4.3.219.
  58. Scheier, M.F., Carver, C.S., Bridges, M.W. (1994). Distinguishing optimism from neuroticism (and trait anxiety, self-mastery and self-esteem): a reevaluation of the Life Orientation Test. "Journal of Personality & Social Psychology", Vol. 67. DOI: 10.1037//0022-3514.67.6.1063.
  59. Schou-Bredal, I., Heir, T., Skogstad, L., Bonsaksen, T., Lerdal, A., Grimholt, T., Ekeberg, Ø. (2017). Population-based norms of the Life Orientation Test-Revised (LOT-R). "International journal of clinical and health psychology", Vol. 17, No. 3. DOI: 10.1016/ j.ijchp.2017.07.005.
  60. Sharot, T. (2011). The optimism bias. "Current Biology", Vol. 21, No. 23. DOI: 10.1016/ j.cub.2011.10.030.
  61. Shepperd, J.A., Klein, W.M.P., Waters, E.A., Weinstein, N.D. (2013). Taking Stock of Unrealistic Optimism. "Perspectives on Psychological Science" Vol. 8, No. 4. DOI: 10.1177/1745691613485247.
  62. Shepperd, J.A., Pogge, G., Howell, J.L. (2017). Assessing the consequences of unrealistic optimism: Challenges and recommendations. "Consciousness and Cognition", Vol. 50. DOI: 10.1016/j.concog.2016.07.004.
  63. Shepperd, J.A., Waters, E.A., Weinstein, N.D., Klein, W.M.P. (2015). A Primer on Unrealistic Optimism. "Current Directions in Psychological Science", Vol. 24, No. 3. DOI: 10.1177/ 0963721414568341.
  64. Stach, R. (2006). Optymizm. Badania nad optymizmem jako mechanizmem adaptacyjnym. Cracow: Wydawnictwo Uniwersytetu Jagiellońskiego.
  65. Szymczak, W. (2018). Podstawy statystyki dla psychologów: podręcznik akademicki, Warsaw: Difin.
  66. Walsh, D., McCartney, G., McCullough, Van Der Pol, M., Buchanan, D., Jones, R. (2015). Always looking on the bright side of life? Exploring optimism and health in three UK post- industrial urban settings. "Journal of Public Health", Vol. 37. DOI: 10.1093/ pubmed/fdv077.
  67. Weinstein, N.D. (1983). Reducing unrealistic optimism about illness susceptibility. "Health Psychology", Vol. 2, No. 1. DOI: 10.1037/0278-6133.2.1.11.
Cited by
Show
ISSN
2300-9918
Language
eng
URI / DOI
http://dx.doi.org/10.7862/rz.2023.hss.09
Share on Facebook Share on Twitter Share on Google+ Share on Pinterest Share on LinkedIn Wyślij znajomemu