Aditya will present the following paper:

The Impact of Prices on Analyst Cash Flow Expectations

Abstract: Analyst cash flow expectations deviate from rational expectations and correlate with stock prices. Does this correlation arise solely because these biased expectations are shared by investors who impact prices? Or do prices impact analyst expectations? I provide evidence of the latter mechanism. Using exogenous price variation from index reconstitutions and mutual fund flow-induced trading, I find analysts raise their cash flow expectations in response to price increases unrelated to fundamentals. This impact of prices on analyst cash flow expectations explains approximately half of the covariance between these objects. These results have important implications for models used to interpret analyst expectations.