Analysts' Research Reports: Caveat Emptor

The Journal of Investing, Winter 1996, 5 (4)

Posted: 23 Mar 2021

See all articles by Amitabh Dugar

Amitabh Dugar

Bridgeway Capital Management

Siva Nathan

Georgia State University

Date Written: December 1, 1996


In this paper, we investigate the dysfunctional incentives of security analysts and how they affect analysts’ earnings forecasts and investment recommendations. We argue that these incentives motivate analysts to issue overly optimistic earnings forecasts and investment recommendations and that the laxity of regulations governing the disclosure and dissemination of analysts’ research reports makes it difficult for investors (especially individual investors) to gain access to these research reports on a timely basis and correctly interpret their investment implications. We conclude with some precautions that investors can take to protect their best interests and a set of recommendations that regulators should implement to address the lack of transparency in analysts’ research reports.

Keywords: Analysts' Research Reports, Analysts' Incentives, Earnings forecasts, Investment Recommendations

JEL Classification: G11,G12,G14,G24

Suggested Citation

Dugar, Amitabh and Nathan, Siva, Analysts' Research Reports: Caveat Emptor (December 1, 1996). The Journal of Investing, Winter 1996, 5 (4), Available at SSRN:

Amitabh Dugar (Contact Author)

Bridgeway Capital Management ( email )

20 Greenway Plaza
Suite 450
Houston, TX 77046
United States
(832) 204-8224 (Phone)

Siva Nathan

Georgia State University ( email )

P.O. Box 4050
Atlanta, GA 30302-4050
United States
404-413-7225 (Phone)

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