The Profitability of Analysts’ Stock Recommendations: What Role Does Investor Sentiment Play?*

Bagnoli, Mark; Clement, Michael B.; Crawley, Michael J.; Watts, Susan G.

doi:10.2139/ssrn.1430617

Cited by 33 publications

(33 citation statements)

References 31 publications

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“…In this context, the value of the recommendations has been the subject of various studies, primarily in the U.S. market, with mixed results (Barber et al [2001], Jegadeesh et al [2004], Jegadeesh and Kim [2006], and Balboa et al [2008Balboa et al [ , 2009). However, the possible relationship between the level of consensus recommendations and investor sentiment, as far as we know, has only been studied in Hribar and McInnis [2012] and Bagnoli et al [2009], and both focused on the U.S. market. Hribar and McInnis [2012] apply a correlation analysis and do not find a significant relationship between recommendations and sentiment.…”

Section: Introductionmentioning

confidence: 99%

Value of Analysts’ Consensus Recommendations and Investor Sentiment

Corredor

Ferrer

Santamaria

2013

Journal of Behavioral Finance

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This paper studies the effect of investor sentiment on analysts' consensus recommendations. Our results show that the optimistic bias of analysts in the issuing of recommendations is affected by investor sentiment: the greater the investor sentiment, the more optimistically biased the analysts' consensus recommendations. This bias is larger in stocks whose characteristics make them hard to value or to arbitrage. We also show that investor sentiment can help in the design of profitable strategies, particularly when taking the short position in portfolios with high sentiment sensitivity stocks.

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Section: Introductionmentioning

confidence: 99%

Value of Analysts’ Consensus Recommendations and Investor Sentiment

Corredor

Ferrer

Santamaria

2013

Journal of Behavioral Finance

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“…A dominant role is attributed to sentiment and the herding effect. Bagnoli, Clement, Crawley, and Watts (2010) conduct a comprehensive study on this area and reach the conclusion that the accuracy of recommendations issued by analysts who follow sentiment is lower compared to that of analysts who are not influenced by it. Being led by sentiment and the herding effect usually result in the market prices of securities being different from their intrinsic value.…”

Section: Psychological Aspectsmentioning

confidence: 99%

The accuracy of alternative stock valuation methods – the case of the Warsaw Stock Exchange

Prusak

2017

Economic Research-Ekonomska Istraživanja

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The main aim of this article is to examine the accuracy of different methods of share valuation used by Polish analysts in reports prepared in order to issue recommendations for companies listed on the Warsaw Stock Exchange. In the literature on the subject, the view which prevails is that the more sophisticated methods, i.e. those taking into account the discounting process, are characterised by higher valuation accuracy. However, the results of the present analysis show that Polish analysts achieve more accurate valuations using the market approach than the DCF model. Nevertheless, the highest level of accuracy is achieved by the target price, which in most cases is the value of the weighted average of valuations obtained via a market valuation and discounting methods. In terms of the multiples which are taken into account in this research, the highest accuracy is achieved with the use of EV/EBIT, although there are no statistically significant differences between the valuations calculated using this multiple and the results obtained with the P/E and EV/EBITDA multiples. Valuations prepared with the use of individual multiples usually generate greater errors compared to the DCF model and the market approach, which uses the weighted average of the valuations achieved with individual multiples.

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“…Investor yang suka menghindari risiko akan memiliki kecenderungan untuk berinvestasi pada perusahaan yang besar dari pada perusahaan yang kecil. Bagnoli et al (2010) berpendapat jika analisis dihadapkan pada pilihan rekomendasi dari dua saham yang sama-sama profitabel, maka analis akan memasukan faktor lain sebelum memberikan rekomendasinya. Adanya faktor lain inilah yang membuat peneliti menduga bahwa ada pengaruh aspek selain laba yang dapat berpengaruh terhadap return saham.…”

Section: Hubungan Ukuran Perusahaan Denganreturn Sahamunclassified

“…Hasil penelitian ini tidak mendukung hasil penelitian Bagnoli (2010), yang menyatakan bahwa ukuran perusahaan menjadi pertimbangan dalam menentukan reaksi pasar atas informasi profitabilitas perusahaan.…”

Section: Simpulanunclassified

Profitabilitas dan Return Saham: Peran Moderasi Arus Kas Operasi dan Ukuran Perusahaan

Prasetyaningrum

2016

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The Profitability of Analysts’ Stock Recommendations: What Role Does Investor Sentiment Play?*

Cited by 33 publications

References 31 publications

Value of Analysts’ Consensus Recommendations and Investor Sentiment

Value of Analysts’ Consensus Recommendations and Investor Sentiment

The accuracy of alternative stock valuation methods – the case of the Warsaw Stock Exchange

Profitabilitas dan Return Saham: Peran Moderasi Arus Kas Operasi dan Ukuran Perusahaan

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