 Distribution of stock ratings and analyst recommendation revisionChia-Ying Chan, Huai-Chun Lo and Yi-Ru Su The North American Journal of Economics and Finance, 2014, vol. 28, issue C, 273-286 Abstract: With the implementation of NASD Rule 2711 in 2002, each brokerage firm is now required to publicly disseminate the distribution of stock ratings in each research report. Hence, this paper investigates the relationship between the percentage of buy recommendations and probability of deciding to downgrade or drop coverage of stocks. Our findings suggest that the percentage of buy recommendations can enhance the probability of deciding to downgrade stock ratings and drop coverage of stocks. Furthermore, we find that analysts tend to revise their recommendations downward to hold instead of an unfavorable level. In addition, we find the market tends to heed downgrade decisions of analysts with a higher percentage of buy ratings. This finding is consistent with Barber, Lehavy, McNichols, and Trueman (2006) by applying data at the broker level. Keywords: NASD Rule 2711; Distribution of stock ratings; Market reaction; Long term performance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:28:y:2014:i:c:p:273-286 DOI: 10.1016/j.najef.2014.03.004 Access Statistics for this article The North American Journal of Economics and Finance is currently edited by Hamid Beladi More articles in The North American Journal of Economics and Finance from Elsevier |
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