Negativity Bias of Analyst Forecasts

Yuk Ying (Candie) Chang and Wei Hao

Journal of Behavioral Finance, 2022, vol. 23, issue 2, 175-188

Abstract: In contrast to the conventional view that analysts forecast optimistically, we provide evidence of the Negativity Bias. Analysts show negative forecast bias associated with their relative local income growth, whether the growth is positive or negative. The bias is stronger for negative growth than for positive growth. The negative bias also directly affects the bias of the next analysts of the same and peer earnings being forecast. Our results suggest non-fundamental factors at work.

Date: 2022
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DOI: 10.1080/15427560.2020.1865353

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