Analysts, Industries, and Price Momentum

Boni, Leslie; Womack, Kent L.

doi:10.1017/s002210900000243x

Cited by 334 publications

(239 citation statements)

References 21 publications

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“…Following a large positive return, the average daily recommendation change is 0.000. 12 This difference in analyst response across positive and negative returns is consistent with the evidence presented in Boni and Womack (2006) in this issue and suggests that the multivariate analysis should be conducted separately for positive and negative return observations.…”

Section: B Univariate Analysissupporting

confidence: 66%

How Do Analyst Recommendations Respond to Major News?

Conrad¹,

Cornell²,

Landsman³

et al. 2006

J. Financ. Quant. Anal.

117

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We examine how analysts respond to public information when setting stock recommendations. We model the determinants of analysts' recommendation changes following large stock price movements. We find evidence of an asymmetry following large positive and negative returns. Following large stock price increases, analysts are equally likely to upgrade or downgrade. Following large stock price declines, analysts are more likely to downgrade. This asymmetry exists after accounting for investment banking relationships and herding behavior. This result suggests recommendation changes are "sticky" in one direction, with analysts reluctant to downgrade. Moreover, this result implies that analysts' optimistic bias may vary through time.

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Section: B Univariate Analysissupporting

confidence: 66%

How Do Analyst Recommendations Respond to Major News?

Conrad¹,

Cornell²,

Landsman³

et al. 2006

J. Financ. Quant. Anal.

117

View full text Add to dashboard Cite

show abstract

“…Mikhail, et al 2004, Boni andWomack 2006). Thus if there are substantially overlap in analyst coverage between two firms, these firms are likely peer firms to each other.…”

Section: Analyst Co-coveragementioning

confidence: 99%

Informational Uniqueness, Corporate Disclosure, and Information Environment

Chau

2016

SSRN Journal

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This dissertation examines how the lack of comparable public peers ("informational uniqueness") is related to a firm's disclosure policy and information environment.Having less information spillover from other public firms may present an information deficiency if it is not compensated by other components of the information environment. Using textual similarity in business description among firms to measure the extent of peer presence, I find that informational uniqueness is associated with a higher propensity by firms to provide ongoing bundled guidance. This is consistent with firms attempting to mitigate the information deficiency through strengthening their tacit commitment to continued disclosure by providing more information regularly on predictable schedules. Overall, I find a strong negative relationship between informational uniqueness and the quality of corporate information environment only among firms without regular bundled guidance. My results suggest that, while informational uniqueness can generate significant information deficiency, firms with strong tacit commitment to ongoing disclosure are largely able to compensate for the lack of information spillover from peers.On the flip side, firms surrounded by many peers may be subject to the influence of peer dynamics on their disclosure behavior. While the presence of comparable public peers likely expands investors' information endowment on the base firm through information spillover on related exposures, discretionary disclosures by peer firms may also signal information arrival. This can raise investors' inferred probability that non-disclosure is due to strategic information withholding rather than the absence of new information. In relation to this, I show that the bid-ask spread of the base firm slightly increases when its closest peer initiates discretionary disclosures, but subsequently decreases upon disclosure by the base firm. In addition, I find that the number of comparable public peers is strongly positively associated with the frequency of discretionary disclosure. Overall, these results suggest that the presence of peer dynamics can induce firms with more peers to provide discretionary disclosures more frequently. This dissertation examines how the lack of comparable public peers ("informational uniqueness") is related to a firm's disclosure policy and information environment. Having less information spillover from other public firms may present an information deficiency if it is not compensated by other components of the information environment. Using textual similarity in business description among firms to measure the extent of peer presence, I find that informational uniqueness is associated with a higher propensity by firms to provide ongoing bundled guidance. This is consistent with firms attempting to mitigate the information deficiency through strengthening their tacit commitment to continued disclosure by providing more information regularly on predictable schedules.Overall, I find a strong negative relationship betwe...

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“…In my triple-difference specification, this measure is represented by an indicator that equals 1 for observations that belong in a tech industry, and 0 otherwise. 5 The second measure is issuer age, assuming that issuances from younger issuers are more difficult to value due to the lack of an operating history. I measure the age of an issuer at its public offering as the difference between the issuer's founding year, obtained from Jay…”

Section: Underpricing and Valuation Risk Measuresmentioning

confidence: 99%

“…Column (5) reports triple-difference coefficient dynamics. Event years 2002 and 2003 are excluded in the regression samples in column (1)- (4), and included in the regression sample in column (5). Panel B reports regression results using the second valuation risk measure, namely, issuer age.…”

Section: Issuer Agementioning

confidence: 99%

The Global Settlement, All-Star Analyst Departures and Their Impact on the Capital Markets

Mahaney-Walter

2015

SSRN Journal

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The Global Research Analyst Settlement prohibited twelve large investment banks from tying equity analysts' compensation to investment banking revenues, causing a large number of Institutional Investor "all-star" analysts to exit the sell-side industry. Using a difference-in-differences specification, I find that the departure of all-stars caused their bank-industry underwriting groups to lose equity issuance market share. Market share losses were more severe for IPOs than for IPOs and follow-on underwritings combined. The higher the average quality of all-stars in a bank-industry, the more severe were the bank-industry's losses. Additionally, the departure of all-stars raised the cost of equity capital for IPOs underwritten by their bank-industry groups, particularly for IPOs that were more difficult to value. Ultimately, the loss of sell-side research talent, an unintended consequence of regulation, forced issuers to accept research coverage of inferior quality, raising the cost of obtaining public capital. Degree Type DissertationDegree Name

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Analysts, Industries, and Price Momentum

Cited by 334 publications

References 21 publications

How Do Analyst Recommendations Respond to Major News?

How Do Analyst Recommendations Respond to Major News?

Informational Uniqueness, Corporate Disclosure, and Information Environment

The Global Settlement, All-Star Analyst Departures and Their Impact on the Capital Markets

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