TOPIC: Noise from Other Industries: Over generalization and Analyst Beliefs

SPEAKER: Rex Wang Renjie

Biography: Rex is a 5th-year PhD Candidate in Finance at the Erasmus School of Economics in Rotterdam, and will soon join the VU University Amsterdam as Assistant Professor in Finance. ?He conducts empirical research on the behavior and labor markets of financial agents, and study how they influence market efficiency, managerial decisions, and corporate outcomes. His work has been presented at many conferences around the world such as FMA and is on the program of the upcoming SFS Cavalcade NA. Rex holds a MSc. and Bsc. in Econometrics from Erasmus University and has been a visiting scholar at the USC Marshall School of Business. Moreover, he has worked in the industry as a quantitative fixed-income analyst at Robeco Group.

Abstract:

How do analysts form earnings expectations? This paper documents that analysts' beliefs are influenced by the performance of other industries that they cover. I show that negative shocks to one coverage industry lead analysts to make more pessimistic earnings forecasts for firms in another industry. Those pessimistic forecasts are less accurate and lower than the actual earnings. Analysts are affected even if the focal firms have no relationship with the shocked industry. These findings are not in line with information spillovers, but rather consistent with the notion that analysts heuristically overgeneralize bad news from other coverage industries and incorrectly lower their expectations about the focal firms. Moreover, I show that analyst overgeneralization has significant effects on the financial market: the resulting increase in analyst disagreement induces higher trading volumes and larger return volatilities, and the resulting analysts' pessimism leads to temporary underpricing.?

简介：Rex现在鹿特丹伊拉斯姆斯大学(Erasmus university)就读博士。他很快将会加入阿姆斯特丹自由大学(VU Amsterdam)就任助理教授。他本科和硕士均毕业于伊拉斯姆斯大学，曾在南加州大学做访问学者。他的研究专长在行为金融和金融分析师对于公司金融和有效市场的影响。他的工作论文多次收录在金融国际会议中。此外，他在资产管理金融机构里有过债券量化分析工作经验。

Time: March 11, 2019, Monday, 11:00 - 12:30 am

举办时间：2019年3月11日（周一）上午11:00-12:30

活动场地：学术会堂702

获得2019年中央财经大学专题学术讲座项目资助