Bias and non professional analysts: the role of expectations

The purpose of a financial statement is to assist the analyst to assess businesses in a neutral way, without being influenced by external factors that are not technically relevant to the evaluation process. Otherwise, assessing a company is not a neutral process because the analyst uses his or her cognitive baggage – made up of prejudice, stereotypes and expectations – in the assessment process. These factors enter into the decision-making process and influence assessment (Kahneman and Tversky, 2000). The research hypothesis of this paper is as follows: the decision-making process of financial analysts is influenced by external labels (in this case, the company name) in their evaluation process. The survey has been conducted on university students in an experiment through the submission of questionnaires to verify whether a simple name change affects the way a company is assessed. The responses show that the effect of name recognition has a significant influence on company evaluation.