Research optimism among securities analysts has been attributed to incentives provided by underwriting activities. We examine how analysts' forecast optimism varies with the business activities used to fund research. We find that analysts at firms with underwriting and trading businesses are...

Using survey data to judge how analyst forecasts are related to evaluations of companies' industry competitiveness, strategic choices, and internal capabilities, the authors found that analyst forecasts are associated with many of the factors that money managers rate as important in their...