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
Date Written: December 1, 2021
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: Suggested Citation