Essays on information and conflicts of interest in stock recommendations

Buy recommendations were misleading investors, whereas sell recommendations were leading them correctly. Late in analysts were tripping over each other to tout Internet stocks, leading investors to enormous losses as that entire sector collapsed this year.

Analysts seem to hand their information to private clients before publication, whereas no such information-leaking pattern was observed for recommendations from journalists. Overall all buy- and sell recommendations yield returns in line with the market.

The second essay analyzes the initiated and changed recommendations published in six well-known Swedish newspapers and business magazines for the period using a buy-and-hold abnormal returns BHARs approach. So the analysts must be jumping out the windows, or at least urging investors to sell and cut their losses, right?

Underwriter analyst recommendations are found to outperform non-underwriter analyst recommendations during the first year from publication, yielding substantially higher mean excess returns.

But there are some less benign factors in poor analyst performance as well. This thesis brings together three separate empirical essays on the information and conflicts of interest in stock recommendations.

Essays on Information and Conflicts of Interest in Stock Recommendations

Quote Three months ago shares of online bookseller Amazon. Following buy- and sell recommendations from analysts yielded BHARs in line with those from following journalist recommendations, which in turn gives rise to returns in line with the market.

Analysts polish their reputations and earn raises, bonuses and partnerships by making accurate predictions and winning top rankings in an annual poll by Institutional Investor magazine.

The third essay examines the credibility in underwriter analyst stock recommendations of Scandinavian IPO firms for the period Recommendations from underwriters comes sooner after the IPO date and performs worse before and in the days surrounding the recommendation date, showing no evidence that underwriters try to "boost" IPO firms in the aftermarket trading.

Its small size and limited number of actors makes the Swedish stock market an interesting comparison to the U. As was done in essay 1, the results here distinguish between recommendations from analysts and journalists. What do analysts do to earn annual salaries that typically run in the six and seven figures at top brokerages and investment banks?

Buy, Hold or Sell: Do Conflicts of Interest Mar Analysts’ Stock Recommendations?

Generally, an analyst is assigned to "cover" a handful of companies in a specific industry. The results support the superior information hypothesis He or she is expected to understand how the industry operates and how it adapts to changing economic and financial conditions.

This asymmetry could be due to positive information from the management of the company being more intricate to interpret than negative and generally exaggerated in a positive direction.

Missed price targets or off-the-mark earnings forecasts occur all the time. The impact to recommendations from journalists was significantly larger than analyst recommendations, implying a tradeoff between the size of pre- publication cumulative abnormal returns and the publication-day effect.

Zeroing in on individual companies, analysts look at sales and profit figures, outstanding debt and other fundamental data, and they evaluate company management. This phenomenon holds for recommendations from both analysts and journalists. The positive publication-day effect for buy recommendations was almost fully reversed after 20 days, supporting the price-pressure hypothesis, and the effect for sell recommendations was negative and prices continued to drift down, supporting the information hypothesis.* A conflict of interest could impair an individual’s ability to perform his or her duties and responsibility objectively.

The Contract Manager has the following conflicts: * Fails to disclose conflict of interest in tender invitation list ie brother; * Partakes in selection recommendation process whilst. Characteristics of Conflicts of Interest in Stock Recommendations.

Alex YiHou Huang * Department of Information Management and Finance, National Chiao Tung Unversity. New information is quickly "built into" a stock’s price.

But there are some less benign factors in poor analyst performance as well. "A number of [academic research] papers have found strong conflicts of interest," says Wharton finance professor Franklin Allen. Download Citation on ResearchGate | Essays on information and conflicts of interest in stock recommendations / | Added t.p.

with thesis statement inserted. Thesis (doctoral)--Göteborgs. Interest conflicts, stock recommendations and investor attention Although a number of previous studies have investigated conflicts of interest faced by analysts, they focus on the investment banking and brokerage divisions.

successful in curbing conflicts of interest linked to investment bank business. Changes in the behavior of brokerage houses are examined through recommendations they issued for US common stocks between July and December

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Essays on information and conflicts of interest in stock recommendations
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