The role of the business press in the pricing of analysts’ recommendation revisions

Minkwan Ahn (), Michael Drake (), Hangsoo Kyung () and Han Stice ()
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Minkwan Ahn: The University of Hong Kong
Michael Drake: Brigham Young University
Hangsoo Kyung: The Chinese University of Hong Kong
Han Stice: The Chinese University of Hong Kong

Review of Accounting Studies, 2019, vol. 24, issue 1, No 10, 392 pages

Abstract: Abstract We investigate the information-dissemination role of the business press by examining the coverage of analyst recommendation revisions. Consistent with the press providing wider dissemination of analyst reports, we find evidence that coverage of analyst recommendation revisions significantly increases the initial market reaction to these revisions and decreases the subsequent price drift. Furthermore, we find that news flash coverage, rather than in-depth coverage, of a recommendation revision drives both the initial market reaction results and drift results. Finally, we show that broader press coverage influences the activities of large-trade institutional investors but not high-frequency traders. Overall, our findings suggest a complementary role between analysts and the business press: increased dissemination of recommendation revisions, rather than information creation on the part of the business press, serves to better inform the market about analyst recommendation revision decisions.

Keywords: Analyst recommendations; Business press; Market reactions; M41; L82; G14 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s11142-019-9485-3

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