Analysts' Recommendations: Evidence from a Portuguese Investment Bank

Review of Financial Markets, Vol. 7, No. 1, pp.5-23, 2005

20 Pages Posted: 11 Dec 2007

See all articles by João Martins Ribeiro

João Martins Ribeiro

affiliation not provided to SSRN

Ruben Barreto

Asian Development Bank

Ana Paula Serra

Universidade do Porto - Faculdade de Economia (FEP)

Abstract

We assess the performance of a few trading strategies based on a sample of 139 analysts' recommendations made public by a Portuguese investment bank's research department. We address whether stock picking strategies on the basis of these recommendations were effective tools for stock selection. Our results suggest that these recommendations have not been useful for stock selection. Most of the recommendation-based strategies we have built generated negative significant performance. We tested the robustness of these findings over time and across industries. We find that the recommendation-based strategies appear to be more effective for selection of Portuguese stocks, which can reflect a comparative home advantage: Portuguese analysts may have better skills in selecting Portuguese stocks rather than foreign stocks.

Keywords: Analysts recommendations, Event studies, Performance measurement, Market efficiency

JEL Classification: G14, G24

Suggested Citation

Ribeiro, João Martins and Barreto, Ruben and Serra, Ana Paula Sousa Freitas Madureira, Analysts' Recommendations: Evidence from a Portuguese Investment Bank. Available at SSRN: https://ssrn.com/abstract=1069721

João Martins Ribeiro

affiliation not provided to SSRN

No Address Available

Ruben Barreto

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Ana Paula Sousa Freitas Madureira Serra (Contact Author)

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Roberto Frias
s/n
Porto, 4200-464
Portugal

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