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Industry Effects Of Analyst Stock Revisions

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  • Aigbe Akhigbe
  • Jeff Madura
  • Melinda Newman

Abstract

We examine the industry valuation effects of analyst stock revisions and identify the variables that influence these effects. Our results show that industry rivals experience significant abnormal returns in response to revision announcements. Although the mean stock price response suggests contagion effects, there is also evidence of significant competitive effects. The valuation effects are influenced by the magnitude of the rated firm's announcement return, along with analyst‐specific and industry‐specific characteristics. However, the sensitivity of the valuation effects to these characteristics is conditioned on whether the industry effects are contagious or competitive.

Suggested Citation

  • Aigbe Akhigbe & Jeff Madura & Melinda Newman, 2006. "Industry Effects Of Analyst Stock Revisions," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 29(2), pages 181-198, June.
    • Handle: RePEc:bla:jfnres:v:29:y:2006:i:2:p:181-198
    DOI: 10.1111/j.1475-6803.2006.00173.x
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    Cited by:

    1. Xin Yu & Peng Zhang & Ying Zheng, 2015. "Corporate Governance, Political Connections, and Intra-Industry Effects: Evidence from Corporate Scandals in China," Financial Management, Financial Management Association International, vol. 44(1), pages 49-80, March.
    2. Yun Wang & Yanxi Li & Zhuang Ma & Jinbo Song, 2019. "The Deterrence Effect of a Penalty for Environmental Violation," Sustainability, MDPI, vol. 11(15), pages 1-19, August.
    3. Aigbe Akhigbe & Jeff Madura & Anna Martin, 2015. "Intra-industry effects of negative stock price surprises," Review of Quantitative Finance and Accounting, Springer, vol. 45(3), pages 541-559, October.
    4. Bolton, Brian & Lian, Qin & Rupley, Kathleen & Zhao, Jing, 2016. "Industry contagion effects of internal control material weakness disclosures," Advances in accounting, Elsevier, vol. 34(C), pages 27-40.
    5. Beatty, Anne & Liao, Scott & Yu, Jeff Jiewei, 2013. "The spillover effect of fraudulent financial reporting on peer firms' investments," Journal of Accounting and Economics, Elsevier, vol. 55(2), pages 183-205.
    6. Yu, Susana & Webb, Gwendolyn, 2017. "Market adaptation to Regulation Fair Disclosure: The use of industry information to enhance the informational environment," Journal of Economics and Business, Elsevier, vol. 89(C), pages 1-12.
    7. Husayn Shahrur & Anand Venkateswaran, 2009. "Industry Prospects And Acquirer Returns In Diversifying Takeovers," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 32(1), pages 23-51, March.

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