Abstract

http://ssrn.com/abstract=2368329
 


 



Is Sell-Side Research More Valuable in Bad Times?


Roger Loh


Singapore Management University - Lee Kong Chian School of Business

René M. Stulz


Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

October 1, 2015

Charles A. Dice Center Working Paper No. 2013-19
Fisher College of Business Working Paper No. 2013-03-19

Abstract:     
Because uncertainty is high in bad times, investors find it harder to assess firm prospects and, hence, should value analyst output more. However, higher uncertainty makes the tasks of analysts harder so it is not clear if analyst output is more valuable in bad times. We find that, in bad times, recommendation and earnings forecast revisions have larger stock-price impact and earnings forecasts are more precise after adjusting for the higher ex ante uncertainty. Further, analysts make more revisions, write longer reports, and their recommendations have larger peer-firm impact. These results are consistent with analysts working harder in bad times.

Number of Pages in PDF File: 47

Keywords: Security Analysts; Stock Recommendations; Earnings Forecasts; Crisis; Recessions; Uncertainty; Learning

JEL Classification: G14, G20, G24


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Date posted: December 18, 2013 ; Last revised: October 9, 2015

Suggested Citation

Loh, Roger and Stulz, René M., Is Sell-Side Research More Valuable in Bad Times? (October 1, 2015). Charles A. Dice Center Working Paper No. 2013-19; Fisher College of Business Working Paper No. 2013-03-19. Available at SSRN: http://ssrn.com/abstract=2368329 or http://dx.doi.org/10.2139/ssrn.2368329

Contact Information

Roger Loh
Singapore Management University - Lee Kong Chian School of Business ( email )
Lee Kong Chian School of Business
50 Stamford Rd
Singapore, 178899
Singapore
HOME PAGE: http://www.mysmu.edu/faculty/rogerloh/

Rene M. Stulz (Contact Author)
Ohio State University (OSU) - Department of Finance ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
HOME PAGE: http://www.cob.ohio-state.edu/fin/faculty/stulz

National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Feedback to SSRN


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