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Article
Publication date: 1 February 2003

Catherine A. Finger and Wayne R. Landsman

This paper provides evidence that will help stock market participants interpret sell‐side analyst buy/sell recommendations. We examine whether recommendation levels (e.g…

Abstract

This paper provides evidence that will help stock market participants interpret sell‐side analyst buy/sell recommendations. We examine whether recommendation levels (e.g. buy) correspond with traditional predictors of the underlying stock's performance, and whether recommendation revisions (e.g. an upgrade) are consistent with news analysts receive. Consistent with theory, we find that more optimistic recommendations are associated with higher mean forecast errors, forecast revisions, and forecasted earnings‐to‐price ratios. However, contrary to expectations, they also have higher market‐to‐book ratios, higher market values, and lower ratios of value to price (Lee et al. 1999). These results are probably driven by specific differences between buys and the less optimistic recommendations, as holds and sells are rarely distinguishable from each other. Our recommendation revision findings are consistent with our expectations. Upgrades have significantly larger earnings forecast errors, earnings forecast revisions, and unexpected earnings growth than do reiterations or downgrades.

Details

Review of Accounting and Finance, vol. 2 no. 2
Type: Research Article
ISSN: 1475-7702

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Article
Publication date: 1 June 2000

Steven R. Ferraro and Darrol J. Stanley

Briefly reviews previous research on the value of investment advisors’ recommendations and presents a study comparing portfolio returns from analysts’ recommendations in…

Abstract

Briefly reviews previous research on the value of investment advisors’ recommendations and presents a study comparing portfolio returns from analysts’ recommendations in the Wall Street Journal’s “Dartboard” contest 1990‐1996, four randomly selected shares and the Dow Jones Industrial Average. Finds the analysts’ portfolio has the highest average returns and standard deviation; and that although some individual analysts have excellent scores in the contest, this is inversely related to the number of times they participate. Suggests that they do not significantly outperform other portfolios, but that contest winners’ tips have significant effects on the market, especially for non‐listed shares. Assesses the implications of the results for the efficient market hypothesis and the share prices of firms with higher asymmetric information.

Details

Managerial Finance, vol. 26 no. 6
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 10 August 2010

Nont Dhiensiri and Akin Sayrak

The purpose of this study is to investigate the value of analyst coverage on the covered firms.

Abstract

Purpose

The purpose of this study is to investigate the value of analyst coverage on the covered firms.

Design/methodology/approach

To isolate the value impact of analyst coverage, the study focuses on a unique set of firms that receive analyst coverage for the first time after having been traded in an exchange for at least one year. Event study and ordinary least square regressions are used to test the hypotheses.

Findings

There is a significant and positive price reaction at the time of the announcement of analyst coverage initiations. However, unlike the coverage initiations around the initial public offers (IPOs), the price impact is not related to the reputation of the analyst firm, the exchange listing or whether the analyst firm is also the IPO underwriter. The sample firms do not experience significant reduction in the level of information asymmetry but experience a significant increase in liquidity. The increase in liquidity only occurs after the coverage initiations. The increase in liquidity is not explained by the increase in institutional investors' interest. Finally, the price impact around a coverage initiation is positively related to the change in liquidity.

Practical implications

The findings suggest that firms benefit from analyst coverage through an improvement in liquidity.

Originality/value

This is the first study to focus on the analysts' first‐time coverage initiations. It argues that focusing on the first‐time coverage initiations provides a better analysis of the effects of analyst activities on the firm value.

Details

Review of Accounting and Finance, vol. 9 no. 3
Type: Research Article
ISSN: 1475-7702

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Article
Publication date: 30 June 2021

Shreya Sharda

This study aims to evaluate the short-term impact of brokerage analysts’ recommendations on abnormal returns using a sample selected from the S&P BSE 100 in the Indian…

Abstract

Purpose

This study aims to evaluate the short-term impact of brokerage analysts’ recommendations on abnormal returns using a sample selected from the S&P BSE 100 in the Indian context. The efficient market hypothesis, specifically, its semi-strong form, is tested for “Buy” stock recommendations published in the electronic version of Business Standard. The crucial issue is, are there any abnormal returns that can be earned following a recommendation? If so, how quickly do prices incorporate the information value of these recommendations? It tests the impact of analyst recommendations on average abnormal returns (AARs) and standardized abnormal returns (SRs) to determine their statistical significance.

Design/methodology/approach

Using a sample of stock recommendations published in the e-version of Business Standard, the event study methodology is used to determine whether AARs and SRs are significantly different from zero for the duration of the event window by using several significance tests.

Findings

The findings indicate a marginal opportunity for profit in the short term, restricted to the event day. However, the effect does not persist, i.e. the market is efficient in its semi-strong form implying that investors cannot consistently earn abnormal returns by following analysts’ recommendations. Post the event date, the market reaction to analyst recommendations becomes positive, however, insignificant until the ninth day after the recommendation providing support to the underreaction hypothesis given by Shliefer (2000) and post-recommendation price drift documented by Womack (1996). The study contributes by using different statistical tests to determine the significance of returns.

Practical implications

There are important implications for traders, investors and portfolio managers. The speed with which market prices incorporate publicly available information is useful in formulating trading strategies. However, stock characteristics such as market capitalization, volatility and level of analyst coverage need to be incorporated while making investment decisions.

Originality/value

The study contributes by using different statistical tests to determine the significance of returns.

Details

Vilakshan - XIMB Journal of Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0973-1954

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Article
Publication date: 17 March 2020

Hossein Dehdarirad, Javad Ghazimirsaeid and Ammar Jalalimanesh

The purpose of this investigation is to identify, evaluate, integrate and summarize relevant and qualified papers through conducting a systematic literature review (SLR…

Abstract

Purpose

The purpose of this investigation is to identify, evaluate, integrate and summarize relevant and qualified papers through conducting a systematic literature review (SLR) on the application of recommender systems (RSs) to suggest a scholarly publication venue for researcher's paper.

Design/methodology/approach

To identify the relevant papers published up to August 11, 2018, an SLR study on four databases (Scopus, Web of Science, IEEE Xplore and ScienceDirect) was conducted. We pursued the guidelines presented by Kitchenham and Charters (2007) for performing SLRs in software engineering. The papers were analyzed based on data sources, RSs classes, techniques/methods/algorithms, datasets, evaluation methodologies and metrics, as well as future directions.

Findings

A total of 32 papers were identified. The most data sources exploited in these papers were textual (title/abstract/keywords) and co-authorship data. The RS classes in the selected papers were almost equally used. DBLP was the main dataset utilized. Cosine similarity, social network analysis (SNA) and term frequency–inverse document frequency (TF–IDF) algorithm were frequently used. In terms of evaluation methodologies, 24 papers applied only offline evaluations. Furthermore, precision, accuracy and recall metrics were the popular performance metrics. In the reviewed papers, “use more datasets” and “new algorithms” were frequently mentioned in the future work part as well as conclusions.

Originality/value

Given that a review study has not been conducted in this area, this paper can provide an insight into the current status in this area and may also contribute to future research in this field.

Details

Data Technologies and Applications, vol. 54 no. 2
Type: Research Article
ISSN: 2514-9288

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Article
Publication date: 11 July 2019

Manjula Wijewickrema, Vivien Petras and Naomal Dias

The purpose of this paper is to develop a journal recommender system, which compares the content similarities between a manuscript and the existing journal articles in two…

Abstract

Purpose

The purpose of this paper is to develop a journal recommender system, which compares the content similarities between a manuscript and the existing journal articles in two subject corpora (covering the social sciences and medicine). The study examines the appropriateness of three text similarity measures and the impact of numerous aspects of corpus documents on system performance.

Design/methodology/approach

Implemented three similarity measures one at a time on a journal recommender system with two separate journal corpora. Two distinct samples of test abstracts were classified and evaluated based on the normalized discounted cumulative gain.

Findings

The BM25 similarity measure outperforms both the cosine and unigram language similarity measures overall. The unigram language measure shows the lowest performance. The performance results are significantly different between each pair of similarity measures, while the BM25 and cosine similarity measures are moderately correlated. The cosine similarity achieves better performance for subjects with higher density of technical vocabulary and shorter corpus documents. Moreover, increasing the number of corpus journals in the domain of social sciences achieved better performance for cosine similarity and BM25.

Originality/value

This is the first work related to comparing the suitability of a number of string-based similarity measures with distinct corpora for journal recommender systems.

Details

The Electronic Library , vol. 37 no. 3
Type: Research Article
ISSN: 0264-0473

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Article
Publication date: 1 April 2002

Abraham Mulugetta, Hormoz Movassaghi and Raquib Zaman

Describes Standard and Poor’s (S&P: USA) star ranking system for firm performance and presents a study of the impact of ranking changes on share prices. Outlines previous…

Abstract

Describes Standard and Poor’s (S&P: USA) star ranking system for firm performance and presents a study of the impact of ranking changes on share prices. Outlines previous research on the effect of ranking changes and examines the share prices for 70 days before and after S&P ranking change announcements 1993‐1995 to assess abnormal returns. Explains the methodology and presents the results, which show significant changes in abnormal returns around the announcement dates, especially where the change is “in leaps rather than in steps”.

Details

Managerial Finance, vol. 28 no. 4
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 10 May 2013

Elizabeth Connors, Holly H. Johnston and Lucia S. Gao

The study aims to evaluate the informational value to investors of the Toxics Release Inventory (TRI) as an external outcome measure of corporate environmental…

Abstract

Purpose

The study aims to evaluate the informational value to investors of the Toxics Release Inventory (TRI) as an external outcome measure of corporate environmental performance. Emphasis is placed on the market response differences between three highly polluting industries.

Design/methodology/approach

The study uses pooled cross‐sectional, time‐series data and an event study methodology to examine the effects of TRI emissions on abnormal market returns.

Findings

There is empirical evidence that market reactions to TRI emissions information vary by industry. Investors reward decreases in emissions in the electric utility industry, but do not penalize increases. In the chemical industry, increases in emissions are penalized, but decreases are not rewarded. Models do not capture any reaction to emissions changes in the pulp and paper industry. These results may be explained by the significant difference between industries in the US percentage of total firm sales.

Research limitations/implications

This research analyzes only data from US firms in three industries and evaluates a single measure of environmental performance, TRI. The value of TRI information is measured for one stakeholder group. Future research should attempt to address these limitations.

Practical implications

The results suggest that research on the effects of environmental performance on market‐based measures should estimate models by industry, whenever possible. From a public policy perspective, the results suggest that regulators may want to consider alternative methods of reducing chemical emissions beyond TRI disclosure in the chemicals and pulp and paper industries.

Originality/value

The study distinguishes between the value of TRI as a “message service” and the content of the “message”. TRI may provide information of value to investors, but performance changes may not be sufficient to merit a price response. The study also specifically addresses industry differences and clearly shows how average coefficients can be misleading relating to this one environmental performance indicator. The use of pooled industry coefficients may lead to inefficient resource allocation decisions within industries and ineffective policies at the regulatory level.

Details

Sustainability Accounting, Management and Policy Journal, vol. 4 no. 1
Type: Research Article
ISSN: 2040-8021

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Article
Publication date: 9 August 2021

Har Singh and Preeti Mahajan

This study aims to investigate research scholars’ and faculty members’ perception, participation in collection development, satisfaction with the adequacy of the library…

Abstract

Purpose

This study aims to investigate research scholars’ and faculty members’ perception, participation in collection development, satisfaction with the adequacy of the library collection and challenges faced during the recommendation of resources in selected university libraries of Northern India.

Design/methodology/approach

The data was collected with the help of a structured questionnaire from the research scholars and faculty members from all disciplines of five universities of Northern India. The comparison between the researchers and faculty members was carried out within the university, as well as across the universities. A total of 652 questionnaires were distributed, out of which 465 filled questionnaires were finally selected for data analysis. The collected data was analyzed with the help of SPSS and the hypotheses were tested using Chi-square (χ²) test.

Findings

The survey results found significant differences in awareness of collection development policy (CDP), as well as the recommendation of resources (i.e. textbooks, reference books, journals and magazines and non-book materials) between the research scholars and faculty members across the libraries. However, no significant difference was found between the opinion of the research scholars and faculty members on the adequacy of library collection across the libraries.

Research limitations/implications

The study was limited to five university libraries of North India which included Maharishi Dayanand University (Rohtak) and Kurukshetra University (Kurukshetra) from the State of Haryana Panjab University from Union Territory of Chandigarh and Punjabi University (Patiala) and Guru Nanak Dev University (Amritsar) from the state of Punjab.

Practical implications

The outcomes of this study will undoubtedly help the library authorities and management to understand the awareness of users (i.e. research scholars and faculty members) about the collection development process such as CDP of the library, kind of resources recommend, their assessment on adequacy of different kind of resources and their ultimate satisfaction from it.

Originality/value

The study is an extensive survey about the perception and participation of research scholars and faculty members in the collection development process of their respective libraries and indicates their satisfaction from the library collection.

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Article
Publication date: 21 September 2009

Susan M. Young

Prior literature has found that as uncertainty in a firms information environment increases, optimism increases in equity analysts’ earnings forecasts. The studies suggest…

Abstract

Prior literature has found that as uncertainty in a firms information environment increases, optimism increases in equity analysts’ earnings forecasts. The studies suggest an economic incentive explanation, commonly called the management‐relations hypothesis. However, there is conflicting evidence that managers would prefer pessimistic forecasts and encourage analysts to “walk‐down” their forecasts to prevent negative earnings surprises. To test these contradictory findings, this study uses an experimental setting to remove economic incentives from the analyst’s decision process and isolate the cause of observed bias in analysts’ reports. The results of the experiment show that an increase in the perceived uncertainty of the forecasting task results in significantly lower relative optimism in analysts’ earnings forecasts. This finding is consistent with a negativity hypothesis and the managementrelations hypothesis extolled in the empirical research. The findings also show that relative forecast optimism bias is positively related to the level of analysts’ buy/sell recommendations consistent with more recent findings that suggest that analysts use motivated reasoning (the tendency to process information in a manner that supports one’s goal) in their judgments of forecasted earnings and recommendations. Together, these results suggest that analysts consider and use financial information differently depending on their decision goal.

Details

Review of Behavioural Finance, vol. 1 no. 1/2
Type: Research Article
ISSN: 1940-5979

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