Underlying risk preferences and analyst risk-taking behavior

Sean Cleary, Jonathan Jona, Gladys Lee, Joshua Shemesh

Research output: Contribution to journalArticleResearchpeer-review

2 Citations (Scopus)


We investigate the relationship between underlying risk preferences on analysts’ work-related decisions. Specifically, we examine whether facial width-to-height ratio (fWHR), an innate personal characteristic that has been linked to financial risk tolerance, is associated with analysts’ stock coverage decisions and the boldness of their earnings forecasts and stock recommendations. We find that high-fWHR analysts cover firms with lower earnings predictability, and issue bolder forecasts and recommendations. Our findings shed new light on the black box of analyst decision making, assisting investment practitioners in evaluating the information content produced by different types of analysts and understanding the observed dispersion in analyst forecasts.

Original languageEnglish
Pages (from-to)949-981
Number of pages33
JournalJournal of Business Finance and Accounting
Issue number7-8
Publication statusPublished - Jul 2020


  • analysts
  • analysts forecasts
  • coverage decisions
  • facial width-to-height ratio
  • forecast boldness
  • fWHR
  • innate characteristics
  • personal characteristics
  • risk tolerance
  • risk-taking behavior
  • stock recommendations

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