The value of analysts’ recommendations and the organization of financial research
AbstractBrokerage houses usually organize their research activities by country or economic sector. We evaluate which research structure provides most value to investors. To do so, we study the relative information content of recommendations issued by country-specialized analysts and sector-specialized analysts. Our findings show that the former issue more valuable recommendations. The strength of country-specific commonalities explains at least part of the better performance of country-specialized financial analysts. Surprisingly, although analysts’ geographic location has been shown in the literature to be a determinant of earnings forecast accuracy, it is not a source of a comparative advantage when it comes to stock recommendations.
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Bibliographic InfoPaper provided by Vlerick Leuven Gent Management School in its series Vlerick Leuven Gent Management School Working Paper Series with number 2009-10.
Length: 50 pages
Date of creation: 04 Apr 2009
Date of revision:
financial analysts; stock recommendations; country and sector factors; geography;
Find related papers by JEL classification:
- G1 - Financial Economics - - General Financial Markets
- G29 - Financial Economics - - Financial Institutions and Services - - - Other
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-06-10 (All new papers)
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