Optimism Bias in Financial Analysts' Earnings Forecasts: Do Commission-Sharing Agreements Reduce Conflicts of Interest?

@article{Galanti2017OptimismBI,
  title={Optimism Bias in Financial Analysts' Earnings Forecasts: Do Commission-Sharing Agreements Reduce Conflicts of Interest?},
  author={S. Galanti and Anne-Ga{\"e}l Vaubourg},
  journal={Econometric Modeling: Capital Markets - Portfolio Theory eJournal},
  year={2017}
}
Implemented in May 2007, the French rules governing commission-sharing agreements (CSAs) consist of unbundling brokerage and investment research fees. The goal of this paper is to analyze the effect of these rules on analysts' forecasts. Based on a sample of one-year-ahead earnings per share forecasts for 58 French firms during the period from 1999 to 2011, we conduct panel data regressions. We show that the analysts' optimistic bias declined significantly after CSA rules, which suggests that… Expand
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