| Summary: | 碩士 === 國立交通大學 === 財務金融研究所 === 102 === This study investigates potential disturbing factors of target price forecasts and the impact might arise from. These factors could make target price forecasts deviate from the fundamental value and enlarge target price forecast error. Worst of all, they might disturb the information conveyed by target price forecasts. Empirical results show that target price forecasts do contain fundamental value of company but are influenced by the past 52-weeks high price, investor sentiment and the motivation of rounding target price forecasts. Two of behavioral factors, the past 52-week high price and rounding target price forecasts, have positive relationship with target price forecasts and are likely the sources of target price forecast errors. However, consumer confidence index, which servers as investor sentiment in this study, provides the opposite results to original expectation. The results demonstrate that the higher the investor sentiment is, the lower the target price forecasts are. Finally, the return predictability of target price forecasts is not significant. However, after controlling the level of the past 52-week high price and consumer confident index separately, different results show up. When the past 52-week high price is close to current price, there’s a positive relationship between target price forecasts and future stock returns. Same outcomes would be found when investor sentiment is at relative stable levels.
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