The Sobering Up Effect: Why Analysts Become Less Optimistic as the Release of Actual Earnings Gets Closer

Woan-Yuh Jang and Chun-Ching Ho

Journal of Behavioral Finance, 2022, vol. 23, issue 3, 281-300

Abstract: Using companies listed on the Taiwan Stock Exchange and the Taipei Exchange between 2000 and 2017, this study explores whether the sobering-up effect exists in analysts’ earnings forecasts. Further, this study also examined whether the aggregate bias (accuracy) of analysts’ annual earnings forecasts vary with analysts’ familiarity with the forecasted companies and whether analysts’ forecasting behavior is influenced by market sentiment. Our findings provide evidence for the existence of sobering-up effect on analysts’ earnings forecasts. When analysts forecast earnings for companies that they are less familiar with or the market is bearish, the analysts’ strength of sobering is more significant.

Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/15427560.2020.1867141 (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:taf:hbhfxx:v:23:y:2022:i:3:p:281-300

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/hbhf20

DOI: 10.1080/15427560.2020.1867141

Access Statistics for this article

Journal of Behavioral Finance is currently edited by Brian Bruce

More articles in Journal of Behavioral Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().