TY  - CHAP
AB  - In this study, I investigate analysts’ ability to process public information for investors by examining price reactions to a sample of analysts’ recommendation revisions issued shortly after quarterly earnings announcements. I find that these recommendation revisions are used by investors to reassess the valuation implications of announced earnings. Confirmatory (contradictory) recommendation revisions that have the same (opposite) sign as prior earnings surprises can cause investors to revise their beliefs about the valuation implications of announced earnings upward (downward) and thus cause price reactions that are positively (negatively) associated with prior earnings surprises. In addition, I find that as the information complexity of earnings announcements gets higher, these recommendation revisions play a more important role in helping investors understand the valuation implications of announced earnings. Finally, I find that analysts’ ability to interpret the valuation implications of announced earnings for investors has remained at a similar level since the adoption of Regulation Fair Disclosure. Overall, this study provides additional evidence on how analysts help improve corporate information environment.
VL  - 13
SN  - 978-1-78052-764-2, 978-1-78052-765-9/1569-3767
DO  - 10.1108/S1569-3767(2012)0000013012
UR  - https://doi.org/10.1108/S1569-3767(2012)0000013012
AU  - Wang Zheng
ED  - J. Jay Choi
ED  - Heibatollah Sami
PY  - 2012
Y1  - 2012/01/01
TI  - The Role of Analysts’ Recommendation Revisions in Helping Investors Understand the Valuation Implications of Announced Earnings
T2  - Transparency and Governance in a Global World
T3  - International Finance Review
PB  - Emerald Group Publishing Limited
SP  - 257
EP  - 286
Y2  - 2024/04/23
ER  -