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Full-Text Articles in Business
Quantifying Cognitive Biases In Analyst Earnings Forecasts, Geoffrey C. Friesen, Paul Weller
Quantifying Cognitive Biases In Analyst Earnings Forecasts, Geoffrey C. Friesen, Paul Weller
Department of Finance: Faculty Publications
This paper develops a formal model of analyst earnings forecasts that discriminates between rational behavior and that induced by cognitive biases. In the model, analysts are Bayesians who issue sequential forecasts that combine new information with the information contained in past forecasts. The model enables us to test for cognitive biases, and to quantify their magnitude. We estimate the model and find strong evidence that analysts are overconfident about the precision of their own information and also subject to cognitive dissonance bias. But they are able to make corrections for bias in the forecasts of others. We show that our …
Additions To Corporate Boards: The Effect Of Gender, Kathleen A. Farrell, Philip L. Hersch
Additions To Corporate Boards: The Effect Of Gender, Kathleen A. Farrell, Philip L. Hersch
Department of Finance: Faculty Publications
During the decade of the 1990s the number of women serving on corporate boards increased substantially. Over this decade, we show that the likelihood of a firm adding a woman to its board in a given year is negatively affected by the number of woman already on the board. The probability of adding a woman is materially increased when a female director departs the board. Adding a director, therefore, is clearly not gender neutral. Although we find that women tend to serve on better performing firms, we also document insignificant abnormal returns on the announcement of a woman added to …