Equity Analyst Reports and Stock Prices

José Gabriel Astaíza-Gómez and Camilo Andrés Pérez Pacheco (camiloperez@unicauca.edu.co)

Apuntes del Cenes, 2022, vol. 41, issue 73, 43-62

Abstract: In this paper we carry out cointegration analyses, in order to study whether the relationship between analysts’ recommendations and their projected capital gains (or losses), is consistent with the hypothesis that sell recommendations are costlier than buy recommendations. We find that recommendations that plainly urge the investor to take action (buy, sell) are consistent with their estimated losses. We also find that recommendations react mildly to higher projected losses, and strongly to higher projected capital gains, which is consistent with systematic optimism. Additionally, we could establish that higher projected losses are positively related to dispersion in recommendations. In summary, we got evidence consistent with Womack’s (1996) hypothesis that the cost of issuing a sell recommendation is higher than the cost of a buy recommendation.

Keywords: sell-side analysts; intrinsic value; trading incentives; informational value; access to information; financial markets; investment. (search for similar items in EconPapers)
JEL-codes: G11 G13 G17 G19 G40 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://revistas.uptc.edu.co/index.php/cenes/article/view/12638

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:col:000152:020704

Access Statistics for this article

More articles in Apuntes del Cenes from Universidad Pedagógica y Tecnológica de Colombia
Bibliographic data for series maintained by Luis Eudoro Vallejo Zamudio (apuntes.cenes@uptc.edu.co).