Analysts' conflicts of interest and biases in earnings forecasts

Louis K.C. Chan, Jason Karceski, Josef Lakonishok

Research output: Contribution to journalArticlepeer-review


Analysts' earnings forecasts are influenced by their desire to win investment banking clients. We hypothesize that the equity bull market of the 1990s, along with the boom in investment banking business, exacerbated analysts' conflicts of interest and their incentives to strategically adjust forecasts to avoid earnings disappointments. We document shifts in the distribution of earnings surprises and related changes in the market's response to surprises and forecast revisions. The evidence for shifts is stronger for growth stocks, where conflicts of interest are more pronounced. However, shifts are less notable for analysts without ties to investment banking and in international markets. COPYRIGHT 2007, SCHOOL OF BUSINESS ADMINISTRATION, UNIVERSITY OF WASHINGTON.

Original languageEnglish (US)
Pages (from-to)893-914
Number of pages22
JournalJournal of Financial and Quantitative Analysis
Issue number4
StatePublished - Dec 2007

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


Dive into the research topics of 'Analysts' conflicts of interest and biases in earnings forecasts'. Together they form a unique fingerprint.

Cite this