Download or read book Two Essays on Sell Side Equity Analysts written by Haosi Chen and published by . This book was released on 2018 with total page 110 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation examines the role of sell side equity analysts in the capital market. The first chapter examines whether sell side analysts, who as an important information intermediary, process information that has been shown to predict future stock returns by academic studies. Our sample includes seven firm level characteristics (e.g., anomalies) that have robust return predictability. We test whether analysts' consensus recommendation and expected returns are consistent with the trading strategies these anomaly variables prescribe. We do not find evidence that sell side analysts are persistently incorporating such information in the correct way. Instead, analysts from certain brokerage firms persistently issue target prices in the opposite direction as what anomaly variables suggests. Our findings suggest that analysts are likely subject to biased expectations and could improve their research quality by incorporating anomaly characteristics. The second chapter investigates whether institutional investors value sell side analysts' qualities differently. We fill the gap in the literature with a novel hand collected dataset, which shows the best sell side analysts voted by hedge funds and institutional investors, respectively. Examining the research output of investors' revealed preferences allows us to detect the qualities valued by these investors. We find that hedge funds preferred analysts update research more frequently and issue less optimistic stock recommendations. The recommendations revised by these analysts also receive stronger market response in the subsequent six months than those made by other "All-Star" sell side analysts. These findings suggest that there are cross sectional differences among sell side analysts that are associated with clients' needs.
Download or read book Two Essays on the Sell side Financial Analysts written by Liu, Xi and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In the first essay titled "The Information Role of Analysts' Contrarian Revisions," I study a special group of revisions: contrarian revisions, defined as recommendation changes that are inconsistent with sizable stock price movements during the past week. I find that contrarian revisions are relatively more informative than trending revisions. In particular, contrarian revisions are associated with a both statistically and economically larger post-announcement drift. I also find contrarian downgrades are less likely to be issued by all-star analysts and analysts with more experience. After implementation of Regulation RD, the market reaction to contrarian revisions issued by all-stars significantly decreases, indicating private information contained in contrarian recommendations has declined. Overall, our results suggest analyst recommendations are important information sources for market participants. In the second essay titled "Market Reaction to Earnings When Investors Disagree," I investigate how the divergence of opinions between individual and institutional investors affects stock price movements around public news events, specifically earnings announcements. I use a discrete static market equilibrium model to illustrate that divergence of investors' opinions has a significant impact on stock price movements around earnings announcements. Specifically, the divergence of opinion has a negative relation with the immediate market reaction but a positive relation with the subsequent stock price drift. I also investigate trading volume around earnings announcements to explore how traders respond to changes in the divergence of investors' opinions. Empirical evidence supports the model implications and indicates announcement trading volume decreases inversely to the divergence of opinions.
Download or read book Essays on Sell Side Analysts written by Sang-Mook Lee and published by . This book was released on 2014 with total page 98 pages. Available in PDF, EPUB and Kindle. Book excerpt: Broadly, this study focuses on roles of sell-side analysts and examines the determinants and consequences of information discovery and stock timing roles by sell-side analysts. We also re-examine reiterations of prior recommendations by sell-side analysts. In Chapter 1, the contribution is to document that analysts add value by engaging in discovery of private information and this value addition is greater than that due to interpretation of public news or stock timing. The innovation in this Chapter is to read over 3,700 analyst reports from Investext and explicitly identify whether the report contains discovery, interpretation, and/or timing. Analysts discover new information by talking to management sources (personal meetings, investor meetings, and conference calls) or non-management sources (such as channel checks). We find that information discovery is prevalent in 17% of the reports. The cumulative abnormal return (CAR) for reports containing discovery are 6.3% for upgrades and -10.6% for downgrades. The CARs are higher for reports containing discovery relative to those containing interpretation or timing. We find that economic determinants predict whether a report will contain discovery. Discovery from management sources is more likely for reports in the pre-Reg FD period and for reports by optimistic analysts. Discovery from non-management sources is more likely for reports written by All-Star analysts, and for firms that have high information asymmetry and those that are followed by more analysts. In Chapter 2, the contribution is to introduce and document a third role that analysts play that is also valuable to investors, which we term "stock timing." Specifically, we define a timing report as one where the analyst revises his recommendation but does not revise the Price Target or any of the 23 fundamental drivers of stock price (such as EPS, FCF) tracked by I/B/E/S. Because the analyst maintains the same price target as in his prior report but still revises his recommendation, such timing calls are contrarian valuation calls. Analysts issue timing downgrades (upgrades) in response to price increases (declines) since the release of their prior report on the firm. 30% of all revisions are timing reports, indicating the importance of the timing role played by analysts. If analysts have timing ability, then markets should react to the release of the timing report and we should observe that economic determinants explain the cross-sectional variation in timing ability. We find the 3-day announcement return is over 2% in magnitude, 62% of the reports are winners (have announcement returns that have the correct sign), 10% of the reports are large enough to be considered influential, and 37% of the reports are persistent winners. These results suggest that analysts have timing ability. The ability to time is similar is magnitude to information interpretation but smaller compared to information discovery. We find considerable cross-sectional and time-series variation in timing ability. We find that the probability of issuing a timing report is positively related to the opportunities to time the stock provided by potential mispricing. Conditional on issuing a timing report, the probability of issuing a winner, an influential winner, or a persistent winner is positively related to analyst experience and negatively related to the costs associated with issuing a timing report. In Chapter 3, we document that recommendation reiterations are not homogeneous and there is a large subset of reiterations that are as much valued by investors as recommendation revisions. We combine Detail History file containing the measures tracked by I/B/E/S (Price Target, EPS, etc.) and Recommendation file to create the full time series of recommendations (initiations, reiterations, and revisions) made by each analyst for each firm for 14 years from 1999 to 2012. By adopting a modified version of "filling in the holes" method, we find that recommendation reiterations are prevalent, consisting of about 80% of recommendations for our 14-year sample period. Second, market response to recommendation reiterations increases monotonically from Reiteration: Strong Sell to Reiteration: Strong Buy. Third, reiterations coupled with contemporary changes in price targets and/or earning forecasts bring substantial absolute abnormal stock returns to investors. Lastly, when we replicate what Loh and Stulz (2011), we find that the number of reiterations which are influential is more than twice that of recommendation revisions that are influential.
Download or read book Best Practices for Equity Research PB written by James Valentine and published by McGraw Hill Professional. This book was released on 2011-01-07 with total page 465 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first real-world guide for training equity research analysts—from a Morgan Stanley veteran Addresses the dearth of practical training materials for research analysts in the U.S. and globally Valentine managed a department of 70 analysts and 100 associates at Morgan Stanley and developed new programs for over 500 employees around the globe He will promote the book through his company's extensive outreach capabilities
Download or read book Three Essays on Security Analysts written by Roger K. Loh and published by . This book was released on 2008 with total page 153 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: I examine the role of sell-side security analysts in financial markets. The first essay addresses the stylized fact that investors' reaction to stock recommendations is often incomplete so that there is a predictable post-recommendation drift. I investigate whether investor inattention contributes to this drift by using turnover as a proxy for attention. I find that the recommendation drift of firms with low prior turnover is more than double in magnitude compared to that of firms with high prior turnover. Volume reactions around the recommendation show that investors fail to react promptly to recommendations issued on low attention stocks. Together, the evidence suggests that investor inattention is a plausible explanation for investors' underreaction to stock recommendations. The second essay studies conflict of interests in analyst research. Analyst research is alleged to be biased because analysts' employers underwrite securities for the firms covered. I argue that this analyst affiliation bias should be strongest for firms with a desire to over-inflate stock prices. Using stock recommendations data, I find that the analyst affiliation bias is on average pervasive across all firms in the bull-market years of 1994-2000. In the regulatory reform years of 2001-2006, only poorly governed firms, firms whose CEO wealth is highly sensitive to stock price, and negative prior return firms continue to exhibit the affiliation bias while the bias mostly disappears for all other firms. Examining the market's reaction around stock recommendations shows that the market does not sufficiently discount the fact that affiliated analyst optimism is more serious for some firms. The third essay investigates the market's response to trends and reversals in earnings surprises where earnings surprises are defined as firms' reported earnings less analysts' consensus forecasts. Trends are defined as consecutive same-signed earnings surprises while reversals occur when the sign of the most recent surprise differs from the prior surprises. I find significantly stronger return drift following trends than reversals. In comparison to reversals, trends are associated with greater predictability in subsequent analyst forecast revisions. These results are inconsistent with representativeness and conservatism causing return drift and could be consistent with the gambler's fallacy in Rabin (2002).
Download or read book Two Essays on Stock Markets written by Wei Dong and published by Open Dissertation Press. This book was released on 2017-01-26 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation, "Two Essays on Stock Markets" by Wei, Dong, 董炜, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: This thesis contains two pieces of empirical study on market efficiency. The first essay tests the semi-strong form of market efficiency in the U.S. We use sell-side analyst target prices as publically available information and test the performance of a mean-variance optimized portfolio which is based on the Treynor and Black model. We focus on constituents of S&P 500 index as our sample universe. During the period of beck-testing from 2004 to 2010, we find that the dynamically rebalanced portfolio beats the market in 6 out of 7 years and that the strategy generates significant risk-adjusted abnormal returns. In the second essay we study the post-earnings-announcement drift (PEAD) phenomenon, a well-documented market anomaly, on the French stock market. Our empirical study devises a difference-in-difference policy experiment to test if trading activities by individual investors contribute to the magnitude of PEAD. We exploit a recent policy reform on the French stock market, which significantly increased speculative trading costs of individual investors and reduced their trading activities. The impact of reform is found twice as large on individual contrarian traders than momentum traders. Using a group of unaffected stocks to control for potential non-experimental factors, we find magnitude of PEAD dropped significantly after the reform in the experimented group but not in the experimented group but not in the control group. DOI: 10.5353/th_b5066221 Subjects: Stock exchanges Efficient market theory
Download or read book Two Essays on Analyst Behavior and Stock Markets written by Lei Sun and published by . This book was released on 2012 with total page 81 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Valuation Techniques written by David T. Larrabee and published by John Wiley & Sons. This book was released on 2012-11-06 with total page 628 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analysis and insights from top thought leaders on a pivotal topic in investing and asset management Valuation is the cornerstone for investment analysis, and a thorough understanding and correct application of valuation methodologies are critical for long-term investing success. Edited by two leading valuation experts from CFA Institute, this book brings together the insights and expertise of some of the most astute and successful investment minds of the past 50 years. From Benjamin Graham, the “father of value investing,” to Aswath Damodaran, you’ll learn what these investment luminaries have to say about investment valuation techniques, including earnings and cash flow analysis. Features the best thinking on valuation from the industry’s masters on the topic, supplemented with dozens of fascinating and instructive real-world examples Comprehensively discusses special valuation situations, such as real options, employee stock options, highly leveraged firms, corporate takeovers, and more Supplies you with the tools you need to successfully navigate and thrive in the ever-changing financial markets Is being produced with the full support and input of CFA Institute, the world’s leading association of investment professionals
Download or read book Confessions of a Wall Street Analyst written by Dan Reingold and published by Harper Collins. This book was released on 2009-10-13 with total page 372 pages. Available in PDF, EPUB and Kindle. Book excerpt: Here is the true story of a top Wall Street player's transformation from a straight-arrow believer to a jaded cynic, who reveals how Wall Street's insider game is really played. Dan Reingold was a top Wall Street analyst for fourteen years and Salomon Smith Barney analyst Jack Grubman's chief competitor in the red-hot sector of telecom. Reingold was part of the "Street" and believed in it. But in this action-packed, highly personal memoir written with accomplished Fast Company senior writer Jennifer Reingold the author describes how his enthusiasm gave way to disgust as he learned how deeply corrupted Wall Street and much of corporate America had become during the roaring stock market bubble of the 1990s. Confessions of a Wall Street Analyst provides a front-row seat at one of the most dramatic -- and ultimately tragic -- periods in financial history. Reingold recounts his introduction to the world of Wall Street leaks and secret deal-making; his experiences with corporate fraud; and Wall Street's alarming penchant for lavish spending and multimillion-dollar pay packages. Reingold spars with arch rival Grubman; fends off intense pressures from Wall Street bankers and corporate CEOs; and is wooed by Morgan Stanley's CEO, John Mack, and CSFB's über-banker Frank Quattrone. Reingold describes instances in which confidential deals are whispered days before their official announcement. He recalls the moment he learns that Bernie Ebbers's WorldCom was massively cooking its books. And he is shocked to have been an unwitting catalyst for a series of sexually explicit e-mails that would rock Wall Street; bring Jack Grubman to his knees; and contribute to the stepping aside of Grubman's boss, Citigroup CEO Sandy Weill. Some of Reingold's stories are outrageous, others hilarious, and many are simply absurd. But, together, they provide a sobering exposé of Wall Street: a jungle of greed and ego, a place brimming with conflicts and inside information, and a business absurdly out of touch with the Main Street it claims to serve. He shows how government investigators, headlines notwithstanding, never got to the heart of the ethical and legal transgressions of the era. And how they completely overlooked Wall Street's pervasive use of inside information, leaving investors -- even sophisticated professionals -- cheated. The book ends with a series of important policy recommendations to clean up the investing business. In the tradition of Liar's Poker and Den of Thieves, Confessions of a Wall Street Analyst is a no-holds-barred insider's account that will open the eyes of every investor.
Download or read book Best Practices for Equity Research Analysts written by James J. Valentine and published by . This book was released on 2010-12 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Conveniently organized for use as a learning tool and everyday reference on the job; this authoritative book offers promising equity research analysts a practical curriculum for mastering their profession. --
Download or read book Wall Street Research written by Boris Groysberg and published by Stanford University Press. This book was released on 2013-08-07 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt: Wall Street Research: Past, Present, and Future provides a timely account of the dramatic evolution of Wall Street research, examining its rise, fall, and reemergence. Despite regulatory, technological, and global forces that have transformed equity research in the last ten years, the industry has proven to be remarkably resilient and consistent. Boris Groysberg and Paul M. Healy get to the heart of Wall Street research—the analysts engaged in the process—and demonstrate how the analysts' roles have evolved, what drives their performance today, and how they stack up against their buy-side counterparts. The book unpacks key trends and describes how different firms have coped with shifting pressures. It concludes with an assessment of where equity research is headed in emerging markets, drawing conclusions about this often overlooked corner of Wall Street and the industry's future challenges.
Download or read book Buy Side Analysts Sell Side Analysts and Fund Performance written by Yingmei Cheng and published by . This book was released on 2009 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the role of financial analysts in helping fund managers make better investment decisions. First, we model how a fund manager utilizes reports on a stock produced by two analysts: a biased sell-side analyst who works for an outside brokerage firm, and an unbiased buy-side analyst who is employed by the fund. The fund manager's action is based on her optimal weighting of the two reports. We demonstrate that the optimal weight put on the buy-side analyst's report increases when the quality of the buy-side analyst's signal on the stock increases, or when the quality of the sell-side analyst's signal decreases, or when the sell-side analyst's degree of bias increases, or when the uncertainty in the bias of the sell-side analyst increases. Second, using a unique data set of U.S. equity funds, we find, consistent with our model, that fund managers rely more on buy-side research relative to sell-side and other research, when: 1) sell-side analysts' coverage on the stocks held by the fund decreases, 2) the average error in sell-side analysts' earnings forecasts on these stocks increases; 3) the size of assets under fund management is larger; and 4) the fund offers performance-based fees. Finally, we find that fund performance improves when the buy-side analysts are more experienced, or when the fund's reliance on buy-side research increases.
Download or read book Three Essays on Financial Analysts Stock Price Forecasts written by Quoc Tuan Quoc Ho and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this thesis, I study three aspects of sell-side analysts' stock price forecasts, henceforth target prices: analyst teams' target price forecast characteristics, analysts' use of information to revise target prices, and determinants of target price disagreement between analysts. The first essay studies the target price forecast performance of team analysts in the UK and finds that teams issue timelier but not less accurate target prices. Unlike evidence from previous studies, my findings suggest that analyst teamwork may improve forecast timeliness without sacrificing forecast accuracy. However, market reactions to team target price revisions are not significantly different from those to individual analyst target price revisions, suggesting that although target prices issued by analyst teams are timelier and not less accurate than those of individual analysts, investors do not consider analyst team target prices more informative. I conjecture that analysts may work in teams to meet the demand to cover more companies while maintaining the quality of research by individual team members rather than to issue more informative reports. In the second essay, I study how analysts revise their target prices in response to new information implicit in recent market returns, stock excess returns and other analysts' target price revisions. The results suggest that analysts' target price revisions are significantly influenced by market returns, stock excess return and other analysts' target price revisions. I also find that the correlation between target price revisions and stock excess returns is significantly higher when the news implicit in these returns is bad rather than good. I conjecture that analysts discover more bad news from the information in stock excess returns because firms tend to withhold bad news, disclosing it only when it becomes inevitable, while they disclose good news early. Using a new measure of bad to good news concentration, I show that the asymmetric responsiveness of target price revisions to positive and negative stock excess returns is significant for firms with the highest concentration of bad news but is insignificant for firms with the lowest concentration of bad news. I argue that firms with the highest concentration of bad news are more likely to withhold and accumulate bad news. The findings, therefore, support my hypothesis that analysts discover more bad news than good news from stock returns because firms tend to withhold bad news, disclosing it only when it is inevitable. The third essay examines the determinants of analyst target price disagreement. I find that while disagreement in short-term earnings and in long-term earnings growth forecasts are significant determinants, recent 12-month idiosyncratic return volatility has the strongest explanatory power for target price disagreement. The findings suggest that target price disagreement is driven not only by analyst disagreement about short-term earnings and long-term earnings growth, but also by differences in analysts' opinions about the impact of recent firm-specific events on value drivers beyond short-term future earnings and long-term growth, which are eventually reflected in past idiosyncratic return volatility.
Download or read book Essays on Top Management and Corporate Behavior written by Hui-Ting Wu and published by Rozenberg Publishers. This book was released on 2010 with total page 196 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book 65 Successful Harvard Business School Application Essays Second Edition written by Lauren Sullivan and published by St. Martin's Griffin. This book was released on 2009-08-04 with total page 240 pages. Available in PDF, EPUB and Kindle. Book excerpt: YOUR LIFE . . . IN 300 WORDS OR LESS It's a daunting task. Even the most seasoned professionals find business school application essays to be among the hardest pieces they ever write. With a diverse pool of talented people applying to the nation's top schools from the most successful companies and prestigious undergraduate programs in the world, a simple biography detailing accomplishments and goals isn't enough. Applicants need clear and compelling arguments that grab admissions officers and absolutely refuse to let go. To help them write the essays that get them accepted into Harvard or any of the country's other top programs, the staff of The Harbus---HBS's student newspaper---have updated and revised their collection of sixty-five actual application essays as well as their detailed analysis of them so that applicants will be able to: * Avoid common pitfalls * Play to their strengths * Get their message across Wherever they are applying, the advice and tested strategies in 65 Successful Harvard Business School Application Essays give business professionals and undergraduates the insider's knowledge to market themselves most effectively and truly own the process.
Download or read book Buy Side Analysts Sell Side Analysts and Investment Decisions of Money Managers written by Yingmei Cheng and published by . This book was released on 2009 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the role of financial analysts in forming institutional investors' investment decisions. We model how a fund manager invests in a stock based on reports produced by a biased sell-side analyst and an unbiased buy-side analyst. She weighs the two reports in her decision making, and puts a higher weight on the buy-side analyst's report when the quality of the buy-side analyst's information relative to that of the sell-side analyst increases, or when the sell-side analyst's degree of bias or the uncertainty in the bias increases. Utilizing a unique data set of U.S. equity funds with description of fund organizational structure and research sources, we find empirical evidence supporting our model predictions on how fund managers weigh buy-side research relative to sell-side and independent research.
Download or read book Dissertation Abstracts International written by and published by . This book was released on 2009 with total page 668 pages. Available in PDF, EPUB and Kindle. Book excerpt:
