Will Financial Analysts Mistake Stocks of Good Companies for Good Stocks? Evidence from Taiwan Stock Market | Science Publications

American Journal of Applied Sciences

I-Ju Chen¹ 

关键词: Cognitive biases;    financial analysts;    expectations on stock return;   

DOI  :  10.3844/ajassp.2005.383.386

学科分类：自然科学（综合）

来源: Science Publications

【 摘 要 】

It has been shown that the individual or institutional investors rely on the informationprovided by the financial analysts. A good stock recommended by financial experts is expected to makeprofit to the investors. However, due to the cognitive biases, the financial analysts or investors areprobably confused in the firm characteristics between the good stocks and the stocks of good companies.Good companies are normally inferred to the company that have good managing and operating systems,however, it is usually though to have good returns as good stocks. The future earning forecasts of thesegood companies may be thus overestimated as compared with the others. Such cognitive biasesprobably results in improper investment and investment loss. In this study, the reputation survey resultsfor the companies in Taiwan and the corresponding financial data are used to verify the proposedcognitive biases hypothesis. The empirical evidence in this study shows that financial analysts mistakestocks of good companies for good stocks. However, it is also shown that the average one-yearbuy-and-hold return of these sample firms (including good companies and good stocks) is still higherthan that of the chosen matching firms.

【 授权许可】

Unknown