Risk Perceptions of Financial Analysts and the Use of Market and Accounting Data

Abstract This paper reports the results of a laboratory experiment which attempts to test the relevance of accounting information and other market-related information in a risk-assessment task. Using the Brunswik lens model framework, estimates of ex ante risk on thirty stocks were regressed against nine company-specific cues and one industry variable. The results provide substantial evidence that publically available accounting and financial data convey information relevant for security risk evaluation.