First Impression Bias: Evidence from Analyst Forecasts

David Hirshleifer, Ben Lourie, Thomas G. Ruchti, Phong Truong

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


We present evidence of first impression bias among finance professionals in the field. Equity analysts' forecasts, target prices, and recommendations suffer from first impression bias. If a firm performs particularly well (poorly) in the year before an analyst follows it, that analyst tends to issue optimistic (pessimistic) evaluations. Consistent with negativity bias, we find that negative first impressions have a stronger effect than positive ones. The market adjusts for analyst first impression bias with a lag. Finally, our findings contribute to the literature on experience effects. We show that a set of professionals in the field, equity analysts, apply U-shaped weights to their sequence of past experiences, with greater weight on first experiences and recent experiences than on intermediate ones.

Original languageEnglish (US)
Pages (from-to)325-364
Number of pages40
JournalReview of Finance
Issue number2
StatePublished - Mar 1 2021

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics


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