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Do Sell-Side Stock Analysts Exhibit Escalation of Commitment?

ABSTRACT: This paper presents evidence that when an analyst makes an out-of-consensus forecast of a company's quarterly earnings that turns out to be incorrect, she escalates her commitment to maintaining an out-of-consensus view on the company. Relative to an analyst who was close to the consensus, the out-of-consensus analyst adjusts her forecasts for the current fiscal year's earnings less in the direction of the quarterly earnings surprise. On average, this type of updating behavior reduces forecasting accuracy, so it does not seem to reflect superior private information. Further empirical results suggest that analysts do not have financial incentives to stand by extreme stock calls in the face of contradictory evidence. Managerial and financial market implications are discussed.

SUBMITTER: Beshears J

PROVIDER: S-EPMC3079210 | biostudies-literature | 2011 Mar

REPOSITORIES: biostudies-literature

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Do Sell-Side Stock Analysts Exhibit Escalation of Commitment?

Beshears John J Milkman Katherine L KL

Journal of economic behavior & organization 20110301 3

This paper presents evidence that when an analyst makes an out-of-consensus forecast of a company's quarterly earnings that turns out to be incorrect, she escalates her commitment to maintaining an out-of-consensus view on the company. Relative to an analyst who was close to the consensus, the out-of-consensus analyst adjusts her forecasts for the current fiscal year's earnings less in the direction of the quarterly earnings surprise. On average, this type of updating behavior reduces forecastin ...[more]

PMID: 21516220

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Project description:During reproductive life, the human endometrium undergoes around 480 cycles of growth, breakdown and regeneration should pregnancy not be achieved. This outstanding regenerative capacity is the basis for women’s cycling and its dysfunction may be involved in the etiology of pathological disorders. Therefore, the human endometrial tissue must rely on a remarkable endometrial somatic stem cells (SSC) population. Here we explore the hypothesis that human endometrial side population (SP) cells correspond to somatic stem cells. We isolated, identified and characterized the SP corresponding to the stromal and epithelial compartments using endometrial SP genes signature, immunophenotyping and characteristic telomerase pattern. We analyzed the clonogenic activity of SP cells under hypoxic conditions and the differentiation capacity in vitro to adipogenic and osteogenic lineages. Finally, we demonstrated the functional capability of endometrial SP to develop human endometrium after subcutaneous injection in NOD-SCID mice. Briefly, SP cells of human endometrium from epithelial and stromal compartments display genotypic, phenotypic and functional features of SSC. Human tissue collection: Human endometrial biopsies were taken using a Pipelle catheter under sterile conditions (from 18 to 48 years) throughout the menstrual cycle. Epithelial and stromal separation: Epithelial and stromal fractions were isolated using an established protocol with modifications. Briefly, samples were carefully dissected and minced into 1-2mm fragments, and enzymatically digested in DMEM containing 10 mg/ml collagenase type IA. Stromal cells (single cells or small aggregates) and epithelial glands were separated on a size basis using gravity sedimentation and membrane filtration. Cell suspensions were treated with erythrocyte lysis solution and evaluation of cell viability was performed with Propidium Iodide (PI; 5 μg/ml). Hoechst 33342 labeling: Cells isolated from the endometrial epithelial and stromal fractions were resuspended in DMEM prewarmed at 37ºC and supplemented with 2% FBS and 10mM HEPES. The cell suspension was labeled in the same media with 5 μg/ml of Hoechst 33342 dye (Ho-33342), either alone or in combination with 100 μM verapamil (Vp), in a water bath at 37ºC for 90-120 minutes. Then, cells were centrifuged for 6 minutes at 4ºC, and were resuspended in cold HBSS supplemented with 2%FBS and 10mM HEPES. PI permits to exclude dead cells prior to the flow cytometric analysis and sorting. Isolation of human endometrial SP cells: Cells were analyzed and sorted by a MoFlo® jet-in-air high speed sorter. Excitation was performed with a water cooled Enterprise II ion laser which operated at the 351 nm and 488 nm wavelengths, and worked at 30 mW. Hoechst 33342 blue and red fluorescences were detected through 405/30 and 670/20 nm band-pass filters respectively, by measuring the signals on a linear scale. PI fluorescence was detected through a band-pass filter of 613/20 on a logarithmic scale. The gates for cell sorting were defined to collect live cells with a low Hoechst 33342 fluorescence (SP fraction), as well as live cells with a high Hoechst 33342 fluorescence (NSP fraction). Microarrays experiments: Endometrial tissue consisted in a total of 8 endometrial biopsies (epithelial (n=8) and stromal (n=8) endometrial cell suspensions, epithelial SP fraction (n=8) and stromal SP fractions (n=8) separately) which were pooled in pairs at the RNA levels. Four microarrays were analyzed per group.

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Do Sell-Side Stock Analysts Exhibit Escalation of Commitment?

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Do Sell-Side Stock Analysts Exhibit Escalation of Commitment?

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