Working on the Weekend: Do Analysts Strategically Time the Release of Their Recommendation Revisions?

53 Pages Posted: 15 Nov 2013 Last revised: 14 Aug 2018

See all articles by Lynn L. Rees

Lynn L. Rees

Utah State University - School of Accountancy; Utah State University - Huntsman School of Business

Nathan Y. Sharp

Texas A&M University - Department of Accounting

Paul A. Wong

University of California, Davis - Graduate School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: April 5, 2016

Abstract

We examine whether financial analysts strategically time the announcement of their recommendation revisions consistent with their incentives to maintain relations with management. We provide evidence that investor and media attention to recommendation revisions is reduced on weekends, which analysts can exploit to strategically time the release of their revisions. We find that downgrades are a higher proportion of weekend revisions than weekday revisions and that analysts with characteristics that suggest they possess the strongest incentives to maintain favor with management are more likely to downgrade on the weekend. In contrast, analysts absent these characteristics are more likely to release downgrades during the week, consistent with these analysts being driven primarily by other incentives, such as the timely release of their recommendation and garnering media attention. We also present evidence suggesting that strategic disclosure of recommendation downgrades is associated with greater access to management on public earnings conference calls.

Keywords: Financial analysts; stock recommendations; strategic timing; management access

JEL Classification: G10, G24, M40, M41

Suggested Citation

Rees, Lynn L. and Sharp, Nathan Y. and Wong, Paul A., Working on the Weekend: Do Analysts Strategically Time the Release of Their Recommendation Revisions? (April 5, 2016). Mays Business School Research Paper No. 2064874, Available at SSRN: https://ssrn.com/abstract=2354561 or http://dx.doi.org/10.2139/ssrn.2354561

Lynn L. Rees (Contact Author)

Utah State University - School of Accountancy ( email )

College of Business
Logan, UT 84322-3540
United States

Utah State University - Huntsman School of Business ( email )

3500 Old Main Hill
Logan, UT 84322-3500
United States
435-797-2272 (Phone)

Nathan Y. Sharp

Texas A&M University - Department of Accounting ( email )

4353 TAMU
College Station, TX 77843-4353
United States
979-845-0338 (Phone)

Paul A. Wong

University of California, Davis - Graduate School of Management ( email )

One Shields Avenue
Davis, CA 95616
United States

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