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Bernhardt, Dan, Xiao , Zhijie and Wan, Chi (2016) The reluctant analyst. Journal of Accounting Research, 54 (4). pp. 987-1040. doi:10.1111/1475-679X.12120 ISSN 0021-8456.
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Official URL: http://dx.doi.org/10.1111/1475-679X.12120
Abstract
We estimate the dynamics of recommendations by financial analysts, uncovering the determinants of inertia in their recommendations. We provide overwhelming evidence that analysts revise recommendations reluctantly, introducing frictions to avoid frequent revisions. More generally, we characterize the sources underlying the infrequent revisions that analysts make. Publicly available data matter far less for explaining recommendation dynamics than do the recommendation frictions and the long-lived information that analysts acquire but the econometrician does not observe. Estimates suggest that analysts structure recommendations strategically to generate a profitable order flow from retail traders. We provide extensive evidence that our model describes how investors believe analysts make recommendations, and that investors value private information revealed by analysts' recommendations.
| Item Type: | Journal Article | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HF Commerce > HF5601 Accounting | ||||||||
| Divisions: | Faculty of Social Sciences > Economics | ||||||||
| Library of Congress Subject Headings (LCSH): | Accounting, Accountants, Quantitative analyst, Econometrics, Markov processes | ||||||||
| Journal or Publication Title: | Journal of Accounting Research | ||||||||
| Publisher: | Wiley-Blackwell Publishing Ltd. | ||||||||
| ISSN: | 0021-8456 | ||||||||
| Official Date: | September 2016 | ||||||||
| Dates: |
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| Volume: | 54 | ||||||||
| Number: | 4 | ||||||||
| Page Range: | pp. 987-1040 | ||||||||
| DOI: | 10.1111/1475-679X.12120 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||
| Date of first compliant deposit: | 14 March 2016 | ||||||||
| Date of first compliant Open Access: | 23 May 2018 |
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