A pessimistic forecast from an analyst may damage the relationships of the analyst with both the managers of the analyzed firm and the analyst's employer.

Question

Quizplus · Accepted Answer

A pessimistic forecast indicating poor performance or financial difficulties of a company may cause discomfort or anger among the management of the analyzed firm, which can impact the relationship between the analyst and the company. Additionally, if the analyst is employed by a financial institution with significant investments in the analyzed firm, the analyst's pessimistic forecast may also harm the analyst's employer's relationship with the company.

A Pessimistic Forecast from an Analyst May Damage the Relationships