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.
|Date of creation:||09 Jan 2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.escholarship.org/repec/anderson_fin/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Brennan, Michael J. & Subrahmanyam, Avanidhar, 1995. "Investment analysis and price formation in securities markets," Journal of Financial Economics, Elsevier, vol. 38(3), pages 361-381, July.
- Mark L. Mitchell & Erik Stafford, 1997.
"Managerial Decisions and Long-Term Stock Price Performance,"
CRSP working papers
453, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Mitchell, Mark L & Stafford, Erik, 2000. "Managerial Decisions and Long-Term Stock Price Performance," The Journal of Business, University of Chicago Press, vol. 73(3), pages 287-329, July.
- Amihud, Yakov & Mendelson, Haim, 1986. "Asset pricing and the bid-ask spread," Journal of Financial Economics, Elsevier, vol. 17(2), pages 223-249, December.
- Dimson, Elroy & Marsh, Paul R, 1984. " An Analysis of Brokers' and Analysts' Unpublished Forecasts of UK Stock Returns," Journal of Finance, American Finance Association, vol. 39(5), pages 1257-92, December.
- Harrison Hong & Jeffrey D. Kubik, 2003. "Analyzing the Analysts: Career Concerns and Biased Earnings Forecasts," Journal of Finance, American Finance Association, vol. 58(1), pages 313-351, 02.
- Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
- Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
- Kent Daniel & Sheridan Titman, 1996.
"Evidence on the Characteristics of Cross Sectional Variation in Stock Returns,"
NBER Working Papers
5604, National Bureau of Economic Research, Inc.
- Daniel, Kent & Titman, Sheridan, 1997. " Evidence on the Characteristics of Cross Sectional Variation in Stock Returns," Journal of Finance, American Finance Association, vol. 52(1), pages 1-33, March.
- Rodney D. Boehme & Sorin M. Sorescu, 2002. "The Long-run Performance Following Dividend Initiations and Resumptions: Underreaction or Product of Chance?," Journal of Finance, American Finance Association, vol. 57(2), pages 871-900, 04.
- Irvine, Paul J., 2003. "The incremental impact of analyst initiation of coverage," Journal of Corporate Finance, Elsevier, vol. 9(4), pages 431-451, September.
- Michaely, Roni & Womack, Kent L, 1999. "Conflict of Interest and the Credibility of Underwriter Analyst Recommendations," Review of Financial Studies, Society for Financial Studies, vol. 12(4), pages 653-86.
When requesting a correction, please mention this item's handle: RePEc:cdl:anderf:qt76x8k0cc. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff)
If references are entirely missing, you can add them using this form.