Is information really efficient for the market? Evidence of confirmatory bias in China
We use the earnings forecast revisions during the period 2005–2019 to study the performance of confirmatory bias in China. As we have found, analysts are less likely to make earnings forecast revisions when the latest two signals are opposite or different from their previous beliefs. In addition, we...
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| Veröffentlicht in: | Accounting and finance (Parkville) 2021-12, Vol.61 (5), p.5965-5997 |
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| creator | Chen, Qingchong Xiong, Xiong Gao, Ya |
| description | We use the earnings forecast revisions during the period 2005–2019 to study the performance of confirmatory bias in China. As we have found, analysts are less likely to make earnings forecast revisions when the latest two signals are opposite or different from their previous beliefs. In addition, we find confirmatory bias has a significantly positive influence on analysts' forecast dispersions, especially when new signals are negative. Finally, we extend the practical significance by combining confirmatory bias with pricing efficiency and find significant harms, especially in bull markets. Uninformed investors and market supervisors should take precautions to avoid this bias. |
| doi_str_mv | 10.1111/acfi.12861 |
| format | Article |
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Uninformed investors and market supervisors should take precautions to avoid this bias.</description><subject>Bias</subject><subject>Confirmatory bias</subject><subject>Earnings forecasting</subject><subject>Information diffusion</subject><subject>Pricing efficiency</subject><subject>Revisions</subject><issn>0810-5391</issn><issn>1467-629X</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2021</creationdate><recordtype>article</recordtype><recordid>eNp9kDFPwzAQhS0EEqWw8AsssSGl-JzETiZURS1UqsQCiM1yXJ_qksbFSany70kIM7fccN97p_cIuQU2g34etEE3A54JOCMTSISMBM8_zsmEZcCiNM7hklw1zY4xBpIlE_K-aqir0Ye9bp2vabC6qjpqEZ1xtm5pf6Lt1tK9Dp-2faSLb7extbHUIzW-Rjcofeho6fRgRYutq_U1uUBdNfbmb0_J23LxWjxH65enVTFfRyZmABHKNJU55yIxoJFxDRJkEhsrpLSxFmA0chnrLEsxFkLyDaYlljwvJcNNxuMpuRt9D8F_HW3Tqp0_hrp_qbiAjEOa8qyn7kfKBN80waI6BNcH6hQwNfSmht7Ub289DCN8cpXt_iHVvFiuRs0PmwZvGg</recordid><startdate>202112</startdate><enddate>202112</enddate><creator>Chen, Qingchong</creator><creator>Xiong, Xiong</creator><creator>Gao, Ya</creator><general>Blackwell Publishing Ltd</general><scope>AAYXX</scope><scope>CITATION</scope><orcidid>https://orcid.org/0000-0002-5296-5918</orcidid></search><sort><creationdate>202112</creationdate><title>Is information really efficient for the market? Evidence of confirmatory bias in China</title><author>Chen, Qingchong ; Xiong, Xiong ; Gao, Ya</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c3011-f755792264c1af02a171743ce677e3a61caf273a885f36672df5bfb29b70fd823</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2021</creationdate><topic>Bias</topic><topic>Confirmatory bias</topic><topic>Earnings forecasting</topic><topic>Information diffusion</topic><topic>Pricing efficiency</topic><topic>Revisions</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Chen, Qingchong</creatorcontrib><creatorcontrib>Xiong, Xiong</creatorcontrib><creatorcontrib>Gao, Ya</creatorcontrib><collection>CrossRef</collection><jtitle>Accounting and finance (Parkville)</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Chen, Qingchong</au><au>Xiong, Xiong</au><au>Gao, Ya</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Is information really efficient for the market? 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| fulltext | fulltext |
| identifier | ISSN: 0810-5391 |
| ispartof | Accounting and finance (Parkville), 2021-12, Vol.61 (5), p.5965-5997 |
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| language | eng |
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| source | Wiley Online Library Journals Frontfile Complete; EBSCOhost Business Source Complete |
| subjects | Bias Confirmatory bias Earnings forecasting Information diffusion Pricing efficiency Revisions |
| title | Is information really efficient for the market? Evidence of confirmatory bias in China |
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