CDS trading and analyst optimism

Zhao, Chen; Li, Yubin; Govindaraj, Suresh; Zhong, Zhaodong

doi:10.1016/j.bar.2022.101109

Cited by 8 publications

(2 citation statements)

References 61 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The above results are consistent with the expectations of hypothesis 3. This result is consistent with the findings of Zhao et al They argue that transparency is negatively associated with analyst forecast optimism [32].…”

Section: Cross-sectional Analyses For H3 To H5supporting

confidence: 92%

Analyst Earnings Forecast Optimism during the COVID-19 Pandemic: Evidence from China

Yan

2022

Sustainability

View full text Add to dashboard Cite

Analysts are important participants in the capital market, but there are relatively few studies on the impact of the COVID-19 outbreak on analysts’ behaviors. This article examines the impact of the COVID-19 outbreak on the analysts’ earnings forecast optimism by using a sample of visits to Chinese listed firms during 2019–2020. We find that the analysts’ earnings forecasts become less optimistic and show pessimism after the outbreak of COVID-19. This result is consistent with past research findings that major natural disasters lead to analysts’ forecasts pessimism. However, we also find that the earnings forecasts issued by analysts with on-site visits are more optimistic after the COVID-19 outbreak. The increase in optimism is associated with accounting information transparency, the proportion of tangible assets, and the revenue geographical concentration of the visited companies. Further analysis shows that higher optimism in visiting analysts’ earnings forecasts after the COVID-19 outbreak leads to a positive market response, suggesting that optimism in visiting analysts’ forecasts misleads the market’s resource allocation. We also find that the higher level of optimism in visiting analysts’ earnings forecasts disappeared after the COVID-19 outbreak was well controlled. Overall, our study enriches the study of the impact of COVID-19 on capital markets from the perspective of analysts’ forecast optimism. Investors in other countries should also be aware of the impact of similar phenomena.

show abstract

Section: Cross-sectional Analyses For H3 To H5supporting

confidence: 92%

Analyst Earnings Forecast Optimism during the COVID-19 Pandemic: Evidence from China

Yan

2022

Sustainability

View full text Add to dashboard Cite

show abstract

“…The coefficient results for the other control variables are consistent with previous literature (Hope, 2002 andGovindaraj et al, 2022). The number of analysts following a firm is positively (negatively) correlated with forecast accuracy (dispersion).…”

Section: Table 2 Pearson Correlations Matrixsupporting

confidence: 88%

The Effects of Credit Default Swaps on Analyst Forecasting Properties

Ekici,

Sottile

2023

JAF

View full text Add to dashboard Cite

This research studies the effect of credit default swaps (CDS), one of the most important financial innovations in recent times, on financial analysts’ forecast characteristics. We examine whether and how the revelation of private information in the CDS market, which often leads to public information disclosure and price discovery in other markets, affects analysts’ forecast characteristics. This research shows that analysts have more accurate and less dispersed cash flow forecasts for firms with CDS contracts. These findings are consistent with the predictions that financial analysts include the information revealed from the CDS market in their cash flow forecasts. Furthermore, we investigate the relation between CDS prices, CDS price changes, and analysts’ forecast properties and find that CDS prices and their changes are associated with analysts’ cash flow forecast accuracy and dispersion.

show abstract