Are Analysts Really Overly Optimistic When Preparing Recommendations?

Abstract

The main aim of this research was to estimate the level and distribution of optimism among analysts preparing stock market recommendations. A secondary goal was to analyze the relationship between optimism and socio-demographic variables such as age, education, and professional experience. The author used the Received Life Orientation Test (LOT-R) to test optimism. At the same time, the paper attempted to compare the results of optimism research using the psychological tests carried out by the author with previous research that perceived optimism as the difference between forecast and reality. According to the survey, individual investors in Poland are characterized by an average level of optimism of 14.38 points according to the LOT-R test, where the average level of optimism ranges from 14 to 18 points. The research did not find that the level of optimism was influenced by such socio-demographic characteristics as age, experience, or education.