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Analyst optimism and market sentiment: Evidence from European corporate sustainability reporters

Author

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  • del Río, Cristina
  • Ferrer, Elena
  • López-Arceiz, Francisco J.

Abstract

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.

Suggested Citation

  • del Río, Cristina & Ferrer, Elena & López-Arceiz, Francisco J., 2024. "Analyst optimism and market sentiment: Evidence from European corporate sustainability reporters," Research in International Business and Finance, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:riibaf:v:69:y:2024:i:c:s027553192400045x
    DOI: 10.1016/j.ribaf.2024.102253
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    More about this item

    Keywords

    Financial analysts; Optimism bias; Investor sentiment; Sustainability;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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