Who are the Best? Local Versus Foreign Analysts on the Latin American Stock Markets

Jean-François Bachmann and Guido Bolliger
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Jean-François Bachmann: RMF Investment Products, Quantitative Analysis Group
Guido Bolliger: University of Neuchâtel and FAME, Institut de l’Entreprise

FAME Research Paper Series from International Center for Financial Asset Management and Engineering

Abstract: This paper investigates the relative performance of local and foreign financial analysts on Latin American emerging markets. There is strong evidence that foreign financial analysts outperform local analysts on these markets. Foreign analysts produce more timely and more accurate forecasts. A significant price reaction is observed following their downward forecast revisions. Therefore foreign investors do not necessarily need to open relations with local financial analysts when they want to trade on these markets. The results are consistent with previous evidence that documents a better information and greater sophistication on the part of foreign investors on overseas markets.

Keywords: analysts’ forecasts; home bias; international diversification; emerging markets; herding behaviour (search for similar items in EconPapers)
JEL-codes: G14 G15 G24 (search for similar items in EconPapers)
Date: 2003-04
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Citations: View citations in EconPapers (1)

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