Does analyst agreement shape executive risk taking?

Nathan C. Goldman, Sreyaa Guha, Allegre Hadida, Elvira Scarlat and Matthias Seifert

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: We examine whether agreement among analysts’ signals has real effects on executives’ compensation-related risk-bearing decisions. Stock option exercises reveal executives’ willingness to bear such risk: exercising converts risky options into value, whereas waiting preserves exposure to future gains and losses. We find that executives are more willing to continue holding options when analysts’ earnings forecasts are tightly aligned and the firm’s valuation path is unstable. The effect is economically large, corresponding to a 24% to 28% reduction in option-implied relative risk aversion. The relation is concentrated among executives with high access to information, which is inconsistent with analyst agreement substituting for private information gaps. Lower relative risk aversion in the studied setting is not associated with superior execution gains and persists after controlling for realized analyst forecast accuracy, inconsistent with superior private information. The relation is concentrated in the pre-crisis period when agreement was later proved optimistic relative to realized earnings, and is stronger in weak-governance firms. Together, our findings show that apparent analyst agreement can shape executives’ compensation-related risk bearing even when analyst signals are not fully validated by subsequent outcomes.

Keywords: Analyst agreement; Relative risk aversion; Stock options; Insider trading; Real effects (search for similar items in EconPapers)
JEL-codes: D81 G41 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2026
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