Behavioral Biases and Report Accuracy: An Empirical Study of Investment Analysts Across Global Markets

Vanessa Anelli Borges de Carvalho, Fabiano Guasti Lima, Vinicius Medeiros Magnani, Carolina Trinca Paulino () and Rafael Confetti Gatsios
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Vanessa Anelli Borges de Carvalho: Faculdade de Economia, Administração e Contabilidade de RibeirãoPreto (FEA-RP), Universidade de São Paulo (USP), Av. Bandeirantes, 3900, Ribeirão Preto 14040-905, SP, Brazil
Fabiano Guasti Lima: Faculdade de Economia, Administração e Contabilidade de RibeirãoPreto (FEA-RP), Universidade de São Paulo (USP), Av. Bandeirantes, 3900, Ribeirão Preto 14040-905, SP, Brazil
Vinicius Medeiros Magnani: Faculdade de Economia, Administração e Contabilidade de RibeirãoPreto (FEA-RP), Universidade de São Paulo (USP), Av. Bandeirantes, 3900, Ribeirão Preto 14040-905, SP, Brazil
Carolina Trinca Paulino: Faculdade de Economia, Administração e Contabilidade de RibeirãoPreto (FEA-RP), Universidade de São Paulo (USP), Av. Bandeirantes, 3900, Ribeirão Preto 14040-905, SP, Brazil
Rafael Confetti Gatsios: Instituto Superior de Gestão, Atlântica Instituto Universitário, R. Prof. Reinaldo dos Santos 46, 1500-552 Lisboa, Portugal

IJFS, 2025, vol. 13, issue 4, 1-13

Abstract: This research investigates the extent to which behavioral biases—specifically overconfidence and representativeness heuristic—affect linguistic tone, narrative structure, and predictive accuracy of financial reports produced by investment analysts operating across diverse global markets. Drawing upon a comprehensive dataset comprising 1575 equity recommendation reports authored by 15 analysts from four major international investment banks between 2019 and 2022, the study evaluates how cognitive tendencies shape report composition and forecast precision. A mixed-methods approach was employed, incorporating qualitative textual analysis and quantitative modeling through random-effects panel regressions. Key constructs assessed include narrative complexity, optimism, visual content usage, and forecast deviation metrics. Our findings reveal that overconfidence significantly influences the tone and detail of analyst reports but does not demonstrably impact projection accuracy. Conversely, representativeness heuristics were not found to consistently affect either report language or earnings-per-share forecast errors. Institutional affiliation emerged as a significant determinant of predictive success, while demographic factors such as gender, native language, and geographic region had limited explanatory power. These findings imply that investors should treat report tone as an indicator of analyst disposition rather than forecast quality, while financial institutions may benefit from training programs aimed at mitigating narrative and stylistic biases in analyst communication.

Keywords: behavioral finance; report tone; forecast accuracy; overconfidence; heuristics (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
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