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Market reaction to analyst forecasts by analysts with familyship: Evidence from South Korea

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  • Mo, Kyoungwon
  • Ha, Wonsuk
  • Park, Kyung-Jin

Abstract

Using the surnames of financial analysts in Korea, this paper examines how investors react to forecasts of analysts with familyship. Since Korea has a strong family-centered culture of sharing the surname, it provides a suitable setting for examining whether investors incorporate analysts’ personal characteristics into their decision-making. This paper finds that stock recommendations by analysts with familyship elicit stronger market reactions. Additionally, the effect is only observed in the cases of upgrade, hold, and buy recommendations. Finally, the effect is observed only when the stock market was not in recession.

Suggested Citation

  • Mo, Kyoungwon & Ha, Wonsuk & Park, Kyung-Jin, 2023. "Market reaction to analyst forecasts by analysts with familyship: Evidence from South Korea," Finance Research Letters, Elsevier, vol. 55(PB).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pb:s154461232300315x
    DOI: 10.1016/j.frl.2023.103943
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    References listed on IDEAS

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    More about this item

    Keywords

    Equity analysts; Familyship; Korean surname; Market reaction; Motivated reasoning;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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