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Evaluating Information Quality And Validity Of Value Line Stock Ratings Using Domination Cones

Author

Listed:
  • S. Y. WANG

    (Department of Finance, National Dong Hwa University, 1, Section 2, University Rd. Shou-Feng, Hualien 974, Taiwan)

  • P. L. YU

    (School of Business, University of Kansas, Lawrence, Kansas 66045-2003, USA;
    Institute of Information Management, National Chiao Tung University, Hsin Chu 3001, Taiwan)

Abstract

Investment in stock market involves many decision criteria and variables; hence investors are increasingly relying on the ratings provided by rating agencies to guide their stock selections. However, do these stock ratings have information value? Are these agencies' ratings valid? We establish the dominance cone principle and use the Value Line stock ratings to demonstrate the application of the dominance principle. Our results based upon limited data show that the Value Line rating does not support the notion that better rating results in better rate of return during 2006–2007.

Suggested Citation

  • S. Y. Wang & P. L. Yu, 2013. "Evaluating Information Quality And Validity Of Value Line Stock Ratings Using Domination Cones," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 12(05), pages 1073-1089.
    • Handle: RePEc:wsi:ijitdm:v:12:y:2013:i:05:n:s0219622013400099
    DOI: 10.1142/S0219622013400099
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