IDEAS home Printed from https://ideas.repec.org/a/bla/irvfin/v25y2025i4ne70041.html

Contrast effects: The phantom of an analyst's latest earnings forecasts

Author

Listed:
  • Huan Cai
  • Xiaodi Zhang
  • Jie Zheng

Abstract

Psychology research on contrast effects suggests that information from a previous decision may be compared with the information of the current task. We document a new stylized fact that an analyst's current annual earnings forecast error of one firm is negatively correlated with her latest forecast revision of another firm. We tease out contrast effects as the main driving force of this negative relationship by excluding other potential mechanisms such as firms' information environment and analyst constraints. We show that variables which may influence analysts' retrieval of past experiences have significant impacts on the magnitude of contrast effects, as predicted by the memory‐based valuation model.

Suggested Citation

  • Huan Cai & Xiaodi Zhang & Jie Zheng, 2025. "Contrast effects: The phantom of an analyst's latest earnings forecasts," International Review of Finance, International Review of Finance Ltd., vol. 25(4), December.
    • Handle: RePEc:bla:irvfin:v:25:y:2025:i:4:n:e70041
    DOI: 10.1111/irfi.70041
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/irfi.70041
    Download Restriction: no
    File URL: https://libkey.io/10.1111/irfi.70041?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:irvfin:v:25:y:2025:i:4:n:e70041. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1369-412X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.