This paper shows that an important link between investor sentiment and firm overvaluation is optimistic earnings expectations, and that management earnings guidance helps resolve sentiment-driven overvaluation. Using previously identified firm characteristics, we find that most of the negative...

<heading id="h1" level="1" implicit="yes" format="display">ABSTRACT</heading>We examine whether analysts' incentives to maintain good relationships with management contribute to the optimistic/pessimistic within-period time trend in analysts' forecasts. In our experiments, 81 experienced sell-side analysts from two brokerage firms predict earnings based on...

Prior research provides only weak and controversial evidence that people overestimate the likelihood of desirable events (wishful thinking), but strong evidence that people bet more heavily on those events (wishful betting). Two experiments show that wishful betting contaminates beliefs in...

This paper replicates the results of the survey of experienced executives reported in Section IV of Seybert (2010). Seybert retracted the survey data from the originally published article due to concerns about the source of the data. I survey 79 experienced executives to elicit their beliefs...