Analysts's Optimism Bias Problem Under The Pressure From Institutional Investor And Personal Fame

From the perspective of interest conflicts,this paper explores the impact of the cost pressure from institutional investors on the optimism of analysts' stock recommendations.In addition,referring to the theory of reputation at the same time,explore its impact as well as its characteristics on analyst's optimism bias with using ‘The New Fortune'star analyst as an indicator of reputation.As the information intermediary of capital market,securities analysts are widely concerned about their optimism.Study of securities analysts' optimism bias could complement consummates our country the study of the field,as well as be used for reference for enterprise and the development of capital markets.This article thoroughly introduces and summarizes the existing literature review in the field.In combination with asymmetric information theory,the fraud triangle theory and reputation theory,this article found that under the cost pressure of institutional investors,analysts tend to release more bullish stock rating.As a measure of the reputation of analysts,‘The New Fortune'star analyst will have a different impact on the original recommendation optimism and the optimistic deviation of the relative recommendation.For original recommendation optimism: low ranking star analyst > high ranking star analyst,while for relative overload for positive deviation under pressure from institutional investors: high ranking star analyst > low ranking star analyst.At the same time,this paper studies the release time of the reports of market analysts,and finds that the time for market analysts to release the recommendation report is around one to three months before the new fortune selection results are announced.New wealth analysts tend to report more optimistic ratings on their original recommendations as they approach The New Fortune selection,but the optimism diverts from the consensus level.Finally,based on the empirical results,this paper makes a management revelation from three aspects: the analyst,the analyst and the institutional investor relations and The New Fortune selection mechanism.