Abstract

http://ssrn.com/abstract=1361620
 
 

References (33)



 
 

Citations (3)



 


 



Analysts’ Industry Expertise


Ohad Kadan


Olin Business School, Washington University in St. Louis

Leonardo Madureira


Case Western Reserve University - Weatherhead School of Management

Rong Wang


Singapore Management University; Singapore Management University - Lee Kong Chian School of Business

Tzachi Zach


Ohio State University (OSU) - Fisher College of Business

July 15, 2011

AFA 2010 Atlanta Meetings Paper
AAA 2010 Financial Accounting and Reporting Section (FARS) Paper

Abstract:     
Industry expertise is an important aspect of sell-side research. We explore this aspect using a novel dataset of industry recommendations, which are often issued by strategy analysts. We study sell-side analysts’ ability to rank industries relative to each other (across-industry expertise), and how it relates to analysts’ ability to rank firms in a particular industry (within-industry expertise). We find that analysts express more optimism towards industries with high levels of investments, past profitability, and past returns. Analysts exhibit across-industry expertise, as portfolios based on industry recommendations generate abnormal returns over both short and long horizons, beyond what would be explained by industry momentum. Additionally, industry recommendations contain information which is orthogonal to the information revealed in firm recommendations, and more so for brokers who benchmark their firm recommendations to industry peers. Consequently, the investment value of sell-side analysts’ recommendations is enhanced when both dimensions of industry expertise are utilized by considering industry and firm recommendations in combination.

Number of Pages in PDF File: 55

Keywords: Industry recommendation, Analysts, Market Efficiency

JEL Classification: G12, G14, G29

Accepted Paper Series


Download This Paper

Date posted: March 17, 2009 ; Last revised: November 14, 2013

Suggested Citation

Kadan, Ohad and Madureira, Leonardo and Wang, Rong and Zach, Tzachi, Analysts’ Industry Expertise (July 15, 2011). AFA 2010 Atlanta Meetings Paper; AAA 2010 Financial Accounting and Reporting Section (FARS) Paper. Available at SSRN: http://ssrn.com/abstract=1361620 or http://dx.doi.org/10.2139/ssrn.1361620

Contact Information

Ohad Kadan
Olin Business School, Washington University in St. Louis ( email )
One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
Leonardo Madureira
Case Western Reserve University - Weatherhead School of Management ( email )
364 PBL Building
Cleveland, OH 44106
United States
216-368-5003 (Phone)
HOME PAGE: http://faculty.weatherhead.case.edu/madureira/
Rong Wang
Singapore Management University ( email )
Li Ka Shing Library
70 Stamford Road
Singapore 178901, 178899
Singapore
Singapore Management University - Lee Kong Chian School of Business ( email )
469 Bukit Timah Road
Singapore 912409
Singapore

Tzachi Zach (Contact Author)
Ohio State University (OSU) - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-292-4101 (Phone)

Feedback to SSRN


Paper statistics
Abstract Views: 4,215
Downloads: 706
Download Rank: 18,845
References:  33
Citations:  3

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.281 seconds