Title: The Influence of Passive Institutional Ownership on Analyst Optimism

Speaker: Lihong Liang, Associate Professor, Syracuse University

Time: 14:00-15:30, Oct 21st, 2026 (Wednesday)

Venue: Room 706, Mingde Business Building (Zhongguancun Campus)

Language: Chinese & English

ABSTRACT:

This paper investigates how passive institutional ownership affects the optimistic bias in analyst forecasts. Using Russell index reconstitution as an exogenous shock to passive ownership, we find that passive ownership reduces analyst optimism. We also document stronger market reactions to forecast revisions for firms with higher passive ownership, consistent with less optimistic opinions conveying more credible information. Further tests show that the effect of passive institutional ownership holds before and after the Global Settlement and the self-regulatory organization rules, however, the effect is more significant before the regulations than after. Overall, our results suggest that passive investment can curb analyst optimism.