The Behavior Of The Trade-offs In The Sell-side Analysts Rating The Degree Of Optimism Tendency Choice

This literature examined analysts'trade-off behaviors in issuing their recommendations,which led to the difference in the extent of optimism.Through theoretical research and modeling analysis,this literature claimed that sell-side analysts would take a trade-off between the gains and opportunity costs to choose the extent of optimism in issuing their recommendations.In empirical study,I used sell-side recommendation samples from year 2005 to year 2007 in Wind Database to examine the relation between the discrepancy in analysts'earning forecast and the characteristic of recommendation,the abnormal return after recommendation issued,and the information content of recommendation issued.The result shows that the larger of discrepancy in analysts'earning forecast caused more favor recommendations,less abnormal return after recommendation issued and less information content of recommendation issued.Based on the specific environment of China's capital market,this literature examined the generalization and differentiation of the exntent of optimisms in sell-side analysts recommendations.The literature show some factors causing this differentiation from interest conflict balance.Using a large sample,my empirical results were generalized and robust.This literature fertilized the knowing knowledge of analysts'behavior and could be used as a support in indentified the quality of research report issued by sell-side analyst.