Do analysts pay attention to managerial sentiment? Evidence from analysts' following decisions and earnings forecasts
We examine the impact of managerial sentiment on analysts' following decisions and earnings forecast accuracy. By analyzing the textual tone of management discussion and analysis sections in annual reports to capture managerial sentiment, we find that when managerial sentiment is more positive,...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Elsevier
2023-03-01
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| Series: | Borsa Istanbul Review |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2214845022000928 |
| _version_ | 1797857711514189824 |
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| author | Yongliang Zeng Kam C. Chan Yunzhu Chen Lingjie Li |
| author_facet | Yongliang Zeng Kam C. Chan Yunzhu Chen Lingjie Li |
| author_sort | Yongliang Zeng |
| collection | DOAJ |
| description | We examine the impact of managerial sentiment on analysts' following decisions and earnings forecast accuracy. By analyzing the textual tone of management discussion and analysis sections in annual reports to capture managerial sentiment, we find that when managerial sentiment is more positive, firms attract more analyst following, while analysts' earnings forecasts become more accurate. The findings are robust to firm- and analyst-level forecasts, as well as to alternative metrics of managerial sentiment and analyst earnings forecasts. Additional analysis suggests that the impact is more salient for firms with high-quality information environments and non-star analysts. |
| first_indexed | 2024-04-09T21:01:12Z |
| format | Article |
| id | doaj.art-c98331cd16f7408abbb614dd6014fdb8 |
| institution | Directory Open Access Journal |
| issn | 2214-8450 |
| language | English |
| last_indexed | 2024-04-09T21:01:12Z |
| publishDate | 2023-03-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Borsa Istanbul Review |
| spelling | doaj.art-c98331cd16f7408abbb614dd6014fdb82023-03-29T09:26:48ZengElsevierBorsa Istanbul Review2214-84502023-03-01232269284Do analysts pay attention to managerial sentiment? Evidence from analysts' following decisions and earnings forecastsYongliang Zeng0Kam C. Chan1Yunzhu Chen2Lingjie Li3Business School, Hunan University, Changsha, ChinaResearch Center of Finance, Shanghai Business School, Shanghai, China; Corresponding author.School of Accounting, Southwestern University of Finance and Economics, Chengdu, ChinaBusiness School, Sun Yat-sen University, Guangzhou, ChinaWe examine the impact of managerial sentiment on analysts' following decisions and earnings forecast accuracy. By analyzing the textual tone of management discussion and analysis sections in annual reports to capture managerial sentiment, we find that when managerial sentiment is more positive, firms attract more analyst following, while analysts' earnings forecasts become more accurate. The findings are robust to firm- and analyst-level forecasts, as well as to alternative metrics of managerial sentiment and analyst earnings forecasts. Additional analysis suggests that the impact is more salient for firms with high-quality information environments and non-star analysts.http://www.sciencedirect.com/science/article/pii/S2214845022000928Managerial sentimentTextual analysisAnalysts followingEarnings forecast accuracy |
| spellingShingle | Yongliang Zeng Kam C. Chan Yunzhu Chen Lingjie Li Do analysts pay attention to managerial sentiment? Evidence from analysts' following decisions and earnings forecasts Borsa Istanbul Review Managerial sentiment Textual analysis Analysts following Earnings forecast accuracy |
| title | Do analysts pay attention to managerial sentiment? Evidence from analysts' following decisions and earnings forecasts |
| title_full | Do analysts pay attention to managerial sentiment? Evidence from analysts' following decisions and earnings forecasts |
| title_fullStr | Do analysts pay attention to managerial sentiment? Evidence from analysts' following decisions and earnings forecasts |
| title_full_unstemmed | Do analysts pay attention to managerial sentiment? Evidence from analysts' following decisions and earnings forecasts |
| title_short | Do analysts pay attention to managerial sentiment? Evidence from analysts' following decisions and earnings forecasts |
| title_sort | do analysts pay attention to managerial sentiment evidence from analysts following decisions and earnings forecasts |
| topic | Managerial sentiment Textual analysis Analysts following Earnings forecast accuracy |
| url | http://www.sciencedirect.com/science/article/pii/S2214845022000928 |
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