Investor Attention, Analyst Optimism, and Stock Price Crash Risk

Shi, Shuke

doi:10.26689/pbes.v4i3.2200

Cited by 2 publications

(1 citation statement)

References 13 publications

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“…Analysts' optimism bias can easily mislead investors' decisions because the negative information of the firms cannot be revealed quickly to outside investors, which means increasing information asymmetry between investors and corporate insiders [75,76] . When the accumulated negative information reaches a tipping point, it will suddenly be released to the stock market, resulting in a stock price crash [35] , which can reduce investors' confidence and thus has a negative impact on firms' innovation quality.…”

Section: Forecasting Optimism Bias and Corporate Innovationmentioning

confidence: 99%

Analyst Coverage, Forecasting Bias, and Corporate Innovation: Evidence from China

MA,

WANG,

et al. 2024

系统科学与信息学报(英文)

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Due to information asymmetry and strategic innovation, firms often encounter challenges related to insufficient driving forces and low-quality innovation outcomes. Analysts always act as information intermediaries who help foster the advancement of corporate innovation activities and the conversion of innovation output. This study examines the impact of analyst coverage and forecasting bias on corporate innovation, employing data from China A-shared listed firms spanning the period 2007 to 2019. We measure corporate innovation from two perspectives: Input and output. Specifically, we use the ratio of research and development (R&D) expenditure to sales as a proxy for the innovation input and the number of patent citations excluding self-citations to measure innovation output. We find that analyst coverage promotes corporate innovation, which is consistent with the "bright" side of analyst coverage. However, the positive effect of analyst coverage hinges on effectively transmitting and disclosing accurate information to investors in the capital market. Based on this, analysts' forecasting bias includes forecasting dispersion and optimism bias. We find evidence that an increase in analysts' forecast dispersion leads to a decrease in corporate innovation quality. Moreover, this paper presents a novel approach by employing the regression discontinuity method to examine the effect of analyst optimistic bias on firm innovation. The empirical findings reveal that overly optimistic forecasts by analysts exacerbate innovation quality. These analyses enrich the research on analyst coverage and corporate innovation, providing an empirical basis for improving the capital market with the help of analysts.

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Section: Forecasting Optimism Bias and Corporate Innovationmentioning

confidence: 99%

Analyst Coverage, Forecasting Bias, and Corporate Innovation: Evidence from China

MA,

WANG,

et al. 2024

系统科学与信息学报(英文)

View full text Add to dashboard Cite

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ESG rating disagreements and stock price crash risk: can distraction, regional digital economy and corporate intelligence maturity play important roles?

2024

AJAR

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PurposeESG issues are gaining increasing attention from investors, but the environmental, social and governance (ESG) rating disagreement caused by different standards of rating agencies misleads investors' investment decisions. This can lead to an increased risk of stock price crashes, causing turbulence in the financial markets and reducing investors' confidence. The paper investigates whether ESG rating disagreement of the current period increases stock price crash risk and the mechanism to mitigate this impact.Design/methodology/approachWith the sample of the listed companies of Shanghai and Shenzhen Stock Exchanges from 2010 to 2022 this paper examines the impact of ESG rating disagreement itself on stock price crash risk. Moreover, this paper examines the mechanisms by analyzing the moderating effect of distraction of investors; digital economy and corporate intelligence maturity.FindingsThis paper finds that ESG rating disagreement itself would amplify the stock price crash risk. When exploring the moderating effect of institutional investors' distraction, digital economic development level and corporate intelligence, the paper found that they would mitigate the impact of ESG rating disagreement on stock price crash risk. The relationship between ESG rating disagreement and stock price crash risk is more pronounced in the context of heavily-polluted, state-owned enterprises (SOEs) and enterprises with star analysts.Originality/valueCurrently, few articles discuss ESG rating disagreement, especially the impact of current ESG rating disagreement on stock price crash risk. This paper focuses on this topic and provides strategies to mitigate the impact of current ESG rating divergence on stock price crash risk.

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Investor Attention, Analyst Optimism, and Stock Price Crash Risk

Cited by 2 publications

References 13 publications

Analyst Coverage, Forecasting Bias, and Corporate Innovation: Evidence from China

Analyst Coverage, Forecasting Bias, and Corporate Innovation: Evidence from China

ESG rating disagreements and stock price crash risk: can distraction, regional digital economy and corporate intelligence maturity play important roles?

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