Are rankings of financial analysts useful to investors?

Artur Aiguzhinov (), Ana Paula Serra () and Carlos Soares ()
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Artur Aiguzhinov: Faculty of Economics & cef.up, University of Porto; Institute for Systems and Computer Engineering, Technology and Science
Carlos Soares: Faculty of Engineering, University of Porto; Institute for Systems and Computer Engineering, Technology and Science

CEF.UP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: Several institutions issue rankings of financial analysts based on the accuracy of their price and EPS forecasts. Given that these rankings are expost they may not be useful to investors. In this paper we show that trading strategies based on perfect foresight and on past rankings outperform a passive strategy. In addition, we report that investors are better off following analysts that issue accurate price targets rather than following those with accurate EPS forecasts.

Keywords: Keywords: financial analysts; rankings; target price forecasts; earnings forecasts; portfolio management (search for similar items in EconPapers)
JEL-codes: G11 G14 G24 G29 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2016-01
New Economics Papers: this item is included in nep-for and nep-mst
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