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

Rene M. Stulz


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

July 18, 2014

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

Abstract:     
In bad times, higher macroeconomic uncertainty makes it harder for investors to assess firms’ prospects. Learning models suggest that informative signals like analyst research should be valued more in bad times. However, higher uncertainty and career concerns may make analyst signals noisier and less valuable in bad times. Examining a large sample of analyst signals, we find that analysts work harder in bad times, but they disagree more and make more inaccurate earnings forecasts. Yet, revisions to forecasts and recommendations have a greater stock-price impact in bad times. These effects are stronger for the financial industry during the credit crisis.

Number of Pages in PDF File: 44

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

JEL Classification: G14, G20, G24

working papers series





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Date posted: December 18, 2013 ; Last revised: July 19, 2014

Suggested Citation

Loh, Roger and Stulz, Rene M., Is Sell-Side Research More Valuable in Bad Times? (July 18, 2014). 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
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