2014 年 7 巻 p. 23-27
Existing studies have argued that market-wide sentiment primarily affects individual noise traders. Contrary to this perspective, in this study, we find that financial analysts, who are sophisticated market participants, may be more vulnerable to sentiment than their peers. We predict that, due to analysts' preference for growth investing, their fair value estimations for growth stocks would be more upwardly biased by bullish market-wide sentiment than those of their market peers. We also predict that this biased estimation for growth stocks would lower the investment value of their recommendations. As is consistent with our predictions, we find that, especially during periods of bullish sentiment, analysts consider growth stocks to be undervalued, even though these stocks are in fact overvalued. In addition, recommended stocks experience poor relative return performance, especially after periods of bullish sentiment, and that this poor performance is not observed after controlling for growth factors.