Is Sell-Side Research More Valuable in Bad Times?
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
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
Date posted: December 18, 2013 ; Last revised: October 9, 2015
© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo2 in 0.219 seconds