Are Analyst Trade Ideas Valuable?

Justin Birru, Sinan Gokkaya, Xi Liu and René Stulz

No 26062, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using a novel database, we show that the stock-price impact of analyst trade ideas is at least as large as the impact of stock recommendation, target price, and earnings forecast changes, and that investors following trade ideas can earn significant abnormal returns. Trade ideas triggered by forthcoming firm catalyst events are more informative than ideas exploiting temporary mispricing. Institutional investors trade in the direction of trade ideas and commission-paying institutional clients do so earlier than non-clients. Analysts generating trade ideas are more established and are more likely to produce ideas for stocks with high dollar trading commissions in their coverage universe.

JEL-codes: G11 G12 G14 G20 G23 G24 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-mst
Note: AP CF
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Citations: View citations in EconPapers (3)

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Working Paper: Are Analyst Trade Ideas Valuable? (2019)
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