Information content of equity analyst reports

Information content of equity analyst reports We catalog the complete contents of Institutional Investor All-American analyst reports and examine the market reaction to their release. Including the justifications supporting an analyst's opinion reduces, and in some models eliminates, the significance of earnings forecasts and recommendation revisions. Analysts both provide new information and interpret previously released information. The information in a report is most important for downgrades; target prices and the analyst's justifications are the only significant elements for reiterations. No correlation exists between valuation methodology and either analyst accuracy or the market's reaction to a report. Our adjusted R 2 s are much larger than those of studies using only summary measures. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economics Elsevier

Information content of equity analyst reports

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Publisher
Elsevier
Copyright
Copyright © 2004 Elsevier B.V.
ISSN
0304-405x
D.O.I.
10.1016/j.jfineco.2004.01.002
Publisher site
See Article on Publisher Site

Abstract

We catalog the complete contents of Institutional Investor All-American analyst reports and examine the market reaction to their release. Including the justifications supporting an analyst's opinion reduces, and in some models eliminates, the significance of earnings forecasts and recommendation revisions. Analysts both provide new information and interpret previously released information. The information in a report is most important for downgrades; target prices and the analyst's justifications are the only significant elements for reiterations. No correlation exists between valuation methodology and either analyst accuracy or the market's reaction to a report. Our adjusted R 2 s are much larger than those of studies using only summary measures.

Journal

Journal of Financial EconomicsElsevier

Published: Feb 1, 2005

References

  • Discrete expectational data and portfolio performance
    Elton, E.; Gruber, M.; Grossman, S.
  • Conflict of interest and the credibility of underwriter analyst recommendations
    Michaely, R.; Womack, K.
  • Reputation and performance among security analysts
    Stickel, S.

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