Wolfers study is highlighted in Wall Street Journal article on Wall Street in-group bias
Justin Wolfers is featured in Jeff Brown’s April 6 Wall Street Journal article, “Stock analysts’ biases are showing, a study finds.” Wolfers was part of a team of academics who found that group bias systematically tilts stock recommendations to give more 'buy' than 'sell' recommendations to stocks of firms headed by CEOs belonging to the stock analyst's in-group.
The study found that the percentage of 'buy' and 'strong buy' recommendations made by male analysts varied significantly depending on the gender of the company's CEO. Male analysts' 'buy' and 'strong buy' recommendations for companies headed by women were 4.21 percentage points lower, while 'sell' recommendations for companies led by women were 2.5 percentage points higher.
The article notes that women analysts tend to be less biased against male-run companies, but states that 80 percent of stock analysts are male.
“It is well documented that individuals systematically adopt favorable opinions about the in-group members compared to the out-group ones,” the authors write. And as it turns out, stock analysts are not immune to that bias.
Justin Wolfers is a professor of public policy at the Ford School and a professor of economics. He is a research associate with the National Bureau for Economic Research, a research affiliate with the Centre for Economic Policy Research in London, and an international research fellow at the Kiel Institute for the World Economy in Germany.