Speed and Expertise in Stock Picking: Older, Slower, and Wiser?

Journal of Financial and Quantitative Analysis, forthcoming

53 Pages Posted: 2 Nov 2014 Last revised: 6 Jan 2022

See all articles by Romain Boulland

Romain Boulland

ESSEC Business School

Chayawat Ornthanalai

University of Toronto - Rotman School of Management

Kent L. Womack

University of Toronto - Rotman School of Management (Deceased)

Date Written: December 1, 2021

Abstract

There are significant differences among sell-side analysts in how frequently they revise recommendations. We show that much of this variation is an analyst-individual trait. Analysts who change recommendations more slowly make recommendations that are more influential and generate better portfolio returns. Slower-revising analysts tend to change recommendations following corporate news that are harder to interpret by non-stock experts, and our evidence suggests that their investment value derives from their ability to better interpret hard-to-assess information. On average, analysts change recommendations less frequently as their career progresses; however, recommendation speed-style is the dominant predictor of their recommendation value.

Keywords: Sell-side analyst; Speed; Reputation concern; Investment style; Stock recommendations

JEL Classification: G14; G24; J22

Suggested Citation

Boulland, Romain and Ornthanalai, Chayawat and Womack, Kent L., Speed and Expertise in Stock Picking: Older, Slower, and Wiser? (December 1, 2021). Journal of Financial and Quantitative Analysis, forthcoming, Available at SSRN: https://ssrn.com/abstract=2517329 or http://dx.doi.org/10.2139/ssrn.2517329

Romain Boulland (Contact Author)

ESSEC Business School ( email )

3 Avenue Bernard Hirsch
CS 50105 CERGY
CERGY, CERGY PONTOISE CEDEX 95021
France

Chayawat Ornthanalai

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Kent L. Womack

University of Toronto - Rotman School of Management (Deceased)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
425
Abstract Views
2,872
Rank
127,032
PlumX Metrics