Information footholds: Isolating local presence as a factor in analyst performance and trading

Charles Chang

Journal of International Money and Finance, 2010, vol. 29, issue 6, 1094-1107

Abstract: I compare the performance of buy/hold/sell recommendations from foreign, local, and expatriate (foreigners with local operations) analysts in an emerging market. Location appears to be important: expatriate analysts significantly outperform foreign analysts. Expatriates also significantly outperform locals, implying that other factors such as global resources also play a role, and a variety of controls for the characteristics of the recommending firm does not alter findings. Trading based on expatriate recommendations generates significantly positive risk-adjusted returns. Furthermore, foreign and local institutional investors appear to trade on the superior information of expatriate analysts, even when it contradicts their own information.

Keywords: Information; asymmetry; Institutional; herding; Emerging; markets; Analyst; recommendations (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (8)

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