The Cross Section of Analyst Recommendations
We analyze the relation between analyst attributes (years of experience, reputation of the analystsâ€™ 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 Griï¬ƒn and Tversky (1992) argument that agents place too much emphasis on the strength of the signal (the dramatic nature of the event) and insuï¬ƒcient 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.
(This abstract was borrowed from another version of this item.)
Volume (Year): 41 (2006)
Issue (Month): 01 (March)
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Web page: http://journals.cambridge.org/jid_JFQ
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