The Impact of The Anchoring and Adjustment Bias on Analysts’ Forecast in Vietnam Stock Market

Abstract:In this research, we consider a well-known behavioral bias of financial market participants, the anchoring and adjustment bias described by Tversky and Kahneman (1974). Empirical findings have shown that this heuristic has significant economic consequences for the efficiency of the financial market of Vietnam. Specifically, we investigate the existence of anchoring and adjustment bias when stock analysts forecast future earnings of a firm by examining 661 analysts’ reports forecasting prices in Vietnam from 2009 - 2012. In addition, we find that anchoring and adjustment bias appears to have considerable influence over both male and female analysts. With the multi-variable regression model, we find out the effects of anchoring and adjustment bias on different group of analysts as well as the time horizon.