Do lottery characteristics matter for analysts’ forecast behavior?

Mei-Chen Lin () and J. Jimmy Yang ()
Additional contact information
Mei-Chen Lin: National Taipei University
J. Jimmy Yang: Oregon State University

Review of Quantitative Finance and Accounting, 2023, vol. 61, issue 3, No 9, 1057-1091

Abstract: Abstract This study examines the effect of lottery characteristics on analysts’ earnings forecasts. We find that analysts are more optimistic for lottery firms. Compensation incentives and access to private information from management are key drivers for analysts’ optimistic forecasts. The optimism of earnings forecast for lottery stocks decreases with analysts’ general and firm-specific experience. Our findings suggest that both behavioral biases and rational incentives help explain analysts’ optimism toward lottery stocks. Moreover, investor sentiment positively affects the effect of lottery characteristics on analyst optimism. Firm-specific risk and market uncertainty enhance the effect of lottery characteristics on analysts’ earnings forecast bias. The level of optimism on lottery stocks increases during up markets and economic expansion.

Keywords: Lottery stocks; Analyst; Earnings forecast optimism; G12; G41 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11156-023-01176-x Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:rqfnac:v:61:y:2023:i:3:d:10.1007_s11156-023-01176-x

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/11156/PS2

DOI: 10.1007/s11156-023-01176-x

Access Statistics for this article

Review of Quantitative Finance and Accounting is currently edited by Cheng-Few Lee

More articles in Review of Quantitative Finance and Accounting from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().