Analyst optimism and market sentiment: Evidence from European corporate sustainability reporters

Cristina del Río, Elena Ferrer and Francisco J. López-Arceiz

Research in International Business and Finance, 2024, vol. 69, issue C

Abstract: This study investigates the effect of investor sentiment on analysts’ optimism bias for a set of European companies with high-quality non-financial information reporting. The contents of the reports should make stock recommendations for such firms that are less prone to sentiment-driven optimism bias; our observations show this to be the case. For further insight, we analysed the informative value of stock recommendations in high- and low-sentiment periods, taking sustainability reporting quality into account. We find that buy recommendations for high-sustainability stocks have no informational value when sentiment is high, whereas informative recommendations in the form of sell recommendations for low-sustainability stocks appear when sentiment is high.

Keywords: Financial analysts; Optimism bias; Investor sentiment; Sustainability (search for similar items in EconPapers)
JEL-codes: G12 G14 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:69:y:2024:i:c:s027553192400045x

DOI: 10.1016/j.ribaf.2024.102253

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