Publication: Analyst optimism and market sentiment: evidence from European corporate sustainability reporters
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AEI//TED2021-131216B-I00
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This study investigates the effect of investor sentiment on analysts’ optimism bias for a set of European companies with high-quality non-financial information reporting. The contents of the reports should make stock recommendations for such firms that are less prone to sentiment-driven optimism bias; our observations show this to be the case. For further insight, we analysed the informative value of stock recommendations in high- and low-sentiment periods, taking sustainability reporting quality into account. We find that buy recommendations for high-sustainability stocks have no informational value when sentiment is high, whereas informative recommendations in the form of sell recommendations for low-sustainability stocks appear when sentiment is high.
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© 2024 The Author(s). This is an open access article under the CC BY-NC-ND license.
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