Slow price reactions to analysts’ recommendation revisions

Abstract

This study explores the reasons for the slow price reactions to analysts' recommendation revisions. We predict that analysts' recommendation revisions contain earnings-related information that is not incorporated in analysts' earnings forecasts and that the slow price reaction is attributable to a gradual incorporation of this earnings-related information into stock prices. We find that, consistent with our prediction, stocks with recommendation upgrades subsequently experience more upward earnings forecast revisions than stocks with recommendation downgrades, and that the differences in subsequent stock returns between upgraded and downgraded stocks is attributable to differences between subsequent earnings forecast (especially, FY2 earnings forecast) revisions.

Information Content of Analysts' Report: A Literature Survey

“…The study is also reveals that there is clear violation of the Efficient Market Hypothesis (EMH) as the investor do not just rely on the earnings forecast rather they look into other information that can influencing the share return. The similar findings are also consistent with Baule and Wilke (2004), Miwa and Ueda (2014), and Li and Ding (2008).…”

An Efficient Stock Recommendation Model Based on Big Order Net Inflow

“…In this paper, we choose twelve answers among all answers to study. There are at least 1 million records about risk information of investors in the user risk database of any securities company because there Mathematical Problems in Engineering 3 The funds amount of investor that can be used to invest [1,5] 3…”

“…However, in such a complicated stock market, the investors do not know which one to believe among the lots of stock comments with dubious authenticity and every choice has a great risk for them. The latter method [4] is difficulty for investors to understand and master since the application of the latter method is relatively complex and involves a lot of profound mathematical knowledge [5]. Given this situation, many scholars have done a lot of research on the stock recommendation [6].…”