The Cross Section of Analyst Recommendations
AbstractWe analyze the relation between analyst attributes (years of experience, reputation of the analystsÃ¢â¬â¢ brokerage houses) and the short- and long-term price reactions to recommendations made by the analysts. We find that in the long-term, the recommendation changes of highly experienced analysts outperform those of low-experience ones. In addition, investors appear to overreact to dramatic upgrades of low-ability analysts, and underreact to small upgrades by high-ability analysts. These results are consistent with the GriÃ¯Â¬Æn and Tversky (1992) argument that agents place too much emphasis on the strength of the signal (the dramatic nature of the event) and insuÃ¯Â¬Æcient emphasis on the weight (the ability of the analyst making the recommendation). The study helps promote an understanding of the analyst industry and its interaction with the investing population.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Journal of Financial and Quantitative Analysis.
Volume (Year): 41 (2006)
Issue (Month): 01 (March)
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Other versions of this item:
- Sorescu, Sorin & Subrahmanyam, Avanidhar, 2004. "The Cross-Section of Analyst Recommendations," University of California at Los Angeles, Anderson Graduate School of Management qt76x8k0cc, Anderson Graduate School of Management, UCLA.
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