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INFORMATION ASYMMETRY AND ANALYST FORECAST IN MARKETWIDE INVESTOR SENTIMENT

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05 Pages : 45-57

http://dx.doi.org/10.31703/ger.2022(VII-II).05      10.31703/ger.2022(VII-II).05      Published : Jun 2022

Information Asymmetry and Analyst Forecast in Market-Wide Investor Sentiment

Abstract

    This study investigates the role of market-wide investor sentiment on the level of information asymmetry and analyst forecast error. The role of market-wide investor sentiments in the valuation and forecasts by analysts is still uncertain. In addition to this, the role of market-wide investor sentiment in influencing information asymmetry between the market participants is a pertinent question. This study attempts to close this gap by answering the impact of market-wide investor sentiment on information asymmetry and analyst forecasting dispersion. The study utilized the data of public listed firms in the USA and employed multiple regression fixed effect model to estimate the results. The results concluded that investor sentiment increases the information asymmetry and analyst forecast errors. That confirms that optimistic investor sentiment brings in the noise of trading and unsophisticated trading mechanism in the stock market, thereby questioning the classical theory of finance, which only relies on the fundamental analysis. The study provides important insights for the investors and analysts to incorporate behaviors and sentiments while undertaking valuation and trading decisions.

    Analyst Forecast, Information Asymmetry, Investor Sentiment

    (1) Safyan Majid
    PhD Scholar, School of Accountancy and Finance, University of Lahore, Lahore, Pakistan
    (2) Muhammad Awais
    Government College University, Lahore, Punjab, Pakistan.
    (3) Javed Iqbal
    National Bank of Pakistan
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Cite this article

APA

CHICAGO

    CHICAGO : Majid, Safyan, Muhammad Awais, and Javed Iqbal. 2022. "Information Asymmetry and Analyst Forecast in Market-Wide Investor Sentiment." Global Economics Review, VII (II): 45-57 doi: 10.31703/ger.2022(VII-II).05

HARVARD

    HARVARD : MAJID, S., AWAIS, M. & IQBAL, J. 2022. Information Asymmetry and Analyst Forecast in Market-Wide Investor Sentiment. Global Economics Review, VII, 45-57.

MHRA

    MHRA : Majid, Safyan, Muhammad Awais, and Javed Iqbal. 2022. "Information Asymmetry and Analyst Forecast in Market-Wide Investor Sentiment." Global Economics Review, VII: 45-57

MLA

    MLA : Majid, Safyan, Muhammad Awais, and Javed Iqbal. "Information Asymmetry and Analyst Forecast in Market-Wide Investor Sentiment." Global Economics Review, VII.II (2022): 45-57 Print.

OXFORD

    OXFORD : Majid, Safyan, Awais, Muhammad, and Iqbal, Javed (2022), "Information Asymmetry and Analyst Forecast in Market-Wide Investor Sentiment", Global Economics Review, VII (II), 45-57

TURABIAN

    TURABIAN : Majid, Safyan, Muhammad Awais, and Javed Iqbal. "Information Asymmetry and Analyst Forecast in Market-Wide Investor Sentiment." Global Economics Review VII, no. II (2022): 45-57. https://doi.org/10.31703/ger.2022(VII-II).05