Are Rankings of Financial Analysts Useful to Investors?
32 Pages Posted: 26 Oct 2015
Date Written: October 26, 2015
Several institutions issue rankings based on the accuracy of price and EPS forecasts. Given that these rankings are ex-post they may not be able useful to investors. In this paper we show that trading strategies based on perfect foresight and past rankings outperform a passive strategy. In addition, we report that investors are better off following analysts that issue accurate price targets rather that those with accurate EPS forecasts.
Keywords: Financial Analysts, Rankings, Target price
JEL Classification: G11
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