First Impression Bias: Evidence from Analyst Forecasts

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.



Work Title First Impression Bias: Evidence from Analyst Forecasts
Open Access
  1. David Hirshleifer
  2. Ben Lourie
  3. Thomas G. Ruchti
  4. Phong Truong
License In Copyright (Rights Reserved)
Work Type Article
  1. Review of Finance
Publication Date March 1, 2021
Publisher Identifier (DOI)
Deposited November 20, 2021




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Work History

Version 1

  • Created
  • Added RoF_FirstImpression.pdf
  • Added Creator David Hirshleifer
  • Added Creator Ben Lourie
  • Added Creator Thomas G. Ruchti
  • Added Creator Phong Truong
  • Published
  • Updated
  • Updated
  • Updated