This paper examines the real effects of outliers in the context of extreme analyst optimism and corporate governance. Using earnings forecasts issued by sell-side analysts between 1991 and 2011, we construct a proxy to capture two essential traits of an outlier’s opinion—being markedly distinct from the others and coming from an individual instead of a cohort of agents. We show that when an analyst issues extremely optimistic forecasts that drastically deviate from peer consensus, there is a greater tendency on the part of firms to manage earnings. When exploring possible underlying mechanisms through which extreme analyst optimism imposes pressure on managers to meet short-term targets, we find that the arrival of an outlier forecast gives rise to the optimism of peer analysts and generates stronger reactions from investors. Further analyses reveal that private information and conflicts of interest cannot explain the effect of an outlier’s opinion on earnings management. Instead, an analyst’s self-motivated incentives are likely at play.