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Can research committees add value for investors. An analysis of Lehman Brothers Ten Uncommon Values recommendations


  • Groysberg, Boris

    () (Harvard Business School)

  • Healy, Paul

    () (Harvard Business School)

  • Gui, Yang

    () (ITG)


Since 1949 Lehman Brothers has used an investment committee to select the top ten recommendations made by its analysts each year. We examine the performance of this committee’s recommendations and find that on average its selections generated abnormal returns of 2.7% at the recommendation announcement and 4.5% for the remainder of the year. This performance cannot be explained by changes in analyst recommendations and/or target prices that accompany the committee report. Nor was it due to analyst screening ability since the returns were higher than those earned from investing in analysts’ top stock picks that were not elected by the committee. Finally, we find that abnormal announcement returns and abnormal trading volume at the report publication are correlated with market-adjusted returns for the prior year’s stock selections, suggesting that investors believe that a successful process in one year is likely to be repeated the following year. We believe that these findings are particularly interesting given recent efforts to require firms to use research recommendation committees to improve the quality of research.

Suggested Citation

  • Groysberg, Boris & Healy, Paul & Gui, Yang, 2008. "Can research committees add value for investors. An analysis of Lehman Brothers Ten Uncommon Values recommendations," Journal of Financial Transformation, Capco Institute, vol. 24, pages 123-130.
  • Handle: RePEc:ris:jofitr:0831

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    References listed on IDEAS

    1. Ricardo J. Caballero & Emmanuel Farhi & Mohamad L. Hammour, 2006. "Speculative Growth: Hints from the U.S. Economy," American Economic Review, American Economic Association, vol. 96(4), pages 1159-1192, September.
    2. Martin S. Feldstein, 2007. "Housing, Credit Markets and the Business Cycle," NBER Working Papers 13471, National Bureau of Economic Research, Inc.
    3. Eugene N. White, 2004. "Bubbles and Busts: The 1990s in the Mirror of the 1920s," FRU Working Papers 2004/09, University of Copenhagen. Department of Economics. Finance Research Unit.
    4. Kevin J. Lansing, 2007. "Asset price bubbles," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue oct26.
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    More about this item


    investment committee; performance of stock recommendations; analysts; regulations; quality of research;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation


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