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Religious holidays and analysts forecast optimism: Evidence from MENA countries

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  • Harit Satt

    (School of Business Administration, Al Akhawayn University in Ifrane, Morocco)

Abstract

We investigate the effect of religious holidays on analyst recommendation on stock markets in MENA countries stock markets (Morocco, United Arab Emirates, Saudi Arabia, Jordan, Kuwait, Lebanon, Qatar, Algeria, Bahrain) for the period of 2004 to 2015. The result shows that on pre-holidays, analysts tend to issue pessimistic recommendations, and issue optimistic recommendations on post-holidays . Prior literature on day-of –the week effect is consonant with our results which document an increase in stock prices during the week, and a decrease in stock prices over the weekend. We argue that analysts can benefit from the upward trend in stock prices during Post-Holidays by issuing an optimistic recommendation. Analysts may as well benefit from the downward trend in stock prices by issuing pessimistic recommendations on pre-holidays. We also exhibit that our results are more consistent among less experienced analysts and in firms with greater information uncertainty.

Suggested Citation

  • Harit Satt, 2016. "Religious holidays and analysts forecast optimism: Evidence from MENA countries," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 4(4), pages 1-11, August.
    • Handle: RePEc:lrc:lareco:v:4:y:2016:i:4:p:1-11
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    File URL: http://www.journalofeconomics.org/index.php/site/article/view/249/289
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    References listed on IDEAS

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    1. Narasimhan Jegadeesh & Woojin Kim, 2010. "Do Analysts Herd? An Analysis of Recommendations and Market Reactions," The Review of Financial Studies, Society for Financial Studies, vol. 23(2), pages 901-937, February.
    2. Chan, Louis K. C. & Karceski, Jason & Lakonishok, Josef, 2007. "Analysts' Conflicts of Interest and Biases in Earnings Forecasts," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 42(4), pages 893-913, December.
    3. Michaely, Roni & Womack, Kent L, 1999. "Conflict of Interest and the Credibility of Underwriter Analyst Recommendations," The Review of Financial Studies, Society for Financial Studies, vol. 12(4), pages 653-686.
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    Cited by:

    1. Razvan STEFANESCU & Ramona DUMITRIU, 2018. "Changes in the stocks prices behavior before and after the public holidays: case of Bucharest Stock Exchange," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 189-202.
    2. Ramona DUMITRIU & Razvan STEFANESCU, 2017. "The Behavior of Stock Prices during Lent and Advent," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 95-112.
    3. Ramona DUMITRIU & Razvan STEFANESCU, 2017. "The Behavior of Stock Prices during Lent and Advent," Proceedings RCE 2017, Editura Lumen, vol. 0, pages 95-112, November.
    4. Stefanescu Razvan & Dumitriu Ramona, 2021. "The Extended Holiday Effects on Bucharest Stock Exchange during Coronavirus Pandemic," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 293-303.
    5. Dumitriu, Ramona & Stefanescu, Răzvan, 2020. "The Extended Holiday Effect on US capital market," MPRA Paper 100463, University Library of Munich, Germany, revised 17 May 2020.

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    More about this item

    Keywords

    Analyst Recommendations; Holidays effect; Optimism.;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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