We would like to thank John Doukas (the editor of this issue) and an anonymous referee for valuable suggestions. We also thank Donal Byard, Terrence Martell, Oghenovo Obrimah, Joseph Weintrop, and seminar participants at Baruch College for helpful comments.
US Analyst Regulation and the Earnings Forecast Bias around the World
Article first published online: 27 JUN 2012
© 2012 John Wiley & Sons Ltd
European Financial Management
Volume 20, Issue 3, pages 435–461, June 2014
How to Cite
Hovakimian, A. and Saenyasiri, E. (2014), US Analyst Regulation and the Earnings Forecast Bias around the World. European Financial Management, 20: 435–461. doi: 10.1111/j.1468-036X.2012.00653.x
- Issue published online: 17 JUN 2014
- Article first published online: 27 JUN 2012
- analyst regulation;
- investor protection;
- cross-country spillover;
- analyst forecast bias;
- analyst conflicts of interest
We examine the spillover effects of the Global Analyst Research Settlement (or Global Settlement) on analysts’ earnings forecasts in 40 developed and emerging markets. Prior to the Global Settlement, analysts generally made overly optimistic forecasts, this bias tending to be higher in countries with less investor protection. This forecast bias declined significantly after passage of the Global Settlement, the spillover effect being stronger for countries with lower investor protection. The spillover effect is also stronger for countries with a more significant presence of the analysts of the 12 banks directly involved in the Global Settlement.