Essays On Financial Analysts
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Essays On Financial Analysts
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Author : Hiep Manh Nguyen
language : en
Publisher:
Release Date : 2020
Essays On Financial Analysts written by Hiep Manh Nguyen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.
Financial analysts play an important role in capital markets. Through the issuance of analysis reports, they facilitate the incorporation of costly private information into security prices, supporting the informational efficiency of financial markets. Thus, understanding their behavior has important implications for firms, investors, and policy makers. Despite decades of work, there are still many open questions regarding how financial analysts produce and how these reports are influenced by their working environment.In this dissertation, we attempt at contributing to the literature of analyst behavior and its effects on the capital market by addressing several new research questions. The first two papers of this thesis try to better understand the incentives behind the well-known analyst bias and identify new sources of bias. The third paper extends into an analysis of corporate governance and the role of financial analysts in alleviating information asymmetry.
Three Essays In Financial Analysts And Corporate Disclosure Using Textual Analysis
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Author : Zhu Chen
language : en
Publisher:
Release Date : 2021
Three Essays In Financial Analysts And Corporate Disclosure Using Textual Analysis written by Zhu Chen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021 with categories.
"The dissertation consists of two essays in financial analysts and one essay in corporate disclosure, all utilizing textual analysis. In the first essay, I decompose analysts’ estimates of weighted average cost of capital (WACC) into abnormal and expected components using a risk characteristic-based model. I find that the abnormal component predicts future stock returns, especially when combined with EPS and dispersion of EPS forecasts. Additional analysis shows that the abnormal component of WACC predicts underlying firms’ future fundamental performance, particularly for experienced analysts and firms with low information intensity. My findings highlight that the abnormal component of analysts’ WACC estimates is informative. Analysts’ decision process to map their forecast inputs such as EPS forecasts and risk assessment to their investment opinions such as target price and recommendation remains to be a black box in the previous literature. In the second essay, I find that analysts’ estimate of WACC is negatively associated with their target price forecasts. It provides empirical evidence that analysts would rationalize the DCF model. From the investor’s perspective, I find that investors generally overreact to the information in WACC estimates when evaluating analysts’ target price forecasts. The extent of the overreaction depends on whether target price changes are conflicted by WACC changes. In light of psychological theories, I provide empirical evidence that when the investors' optimistic verifiable expectation is rejected, they switch to the unverifiable component - WACC for information. At last, I show similar empirical evidence for analyst recommendation.In the third essay, using 4,262 Form 20-F filings from 37 countries, we find that corporate risk-taking is positively associated with managerial expectation as measured by forward-looking statement (FLS) tone, particularly for firms from countries with strong institutions and for FLS tone related to macroeconomics. Our study advances the measure of overall managerial expectations and links it to corporate risk-taking in an international setting"--
Three Essays On Financial Analysts
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Author : Dong Hyun Son
language : en
Publisher:
Release Date : 2014
Three Essays On Financial Analysts written by Dong Hyun Son and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with Business analysts categories.
Two Essays On Financial Analysts
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Author : Kerry Xiao
language : en
Publisher:
Release Date : 2020
Two Essays On Financial Analysts written by Kerry Xiao and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.
Essays On Financial Analysts Forecasts
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Author : Marius del Giudice Rodriguez
language : en
Publisher:
Release Date : 2006
Essays On Financial Analysts Forecasts written by Marius del Giudice Rodriguez and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Corporate profits categories.
This dissertation contains three self-contained chapters dealing with specific aspects of financial analysts' earnings forecasts. After recent accounting scandals, much attention has turned to the incentives present in the career of professional financial analysts. The literature points to several reasons why financial analysts behave overoptimistically when providing their predictions. In particular, analysts may wish to maintain good relations with firm management, to please the underwriters and brokerage houses at which they are employed, and to broaden career choice. While the literature has focused more on analysts' strategic behavior in these situations, less attention has been paid to the implications these factors have on financial analysts' loss functions. The loss function dictates the criteria that analysts use in order to build their forecasts. Using a simple compensation scheme in which the sign of prediction errors affect their incomes differently, in the first chapter we examine the implications this has on their loss function. We show that depending on the contract offered, analysts have a strict preference for under-prediction or over-prediction and the size of this asymmetric behavior depends on the parameter that governs the financial analyst's preferences over wealth. This is turn affects the bias in their forecasts. Recent developments in the forecasting literature allow for the estimation of asymmetry parameters after observing data on forecasts. Moreover, they allow for a more general test of rationality once asymmetries are present. We make use of forecast data from financial analysts, provided by I/B/E/S, and present evidence of asymmetries and weak evidence against rationality. In the second chapter we study the evolution over time in the revisions to financial analysts' earnings estimates for the 30 Dow Jones firms over a 20 year period. If analysts' forecasts used information efficiently, earnings revisions should not be predictable. However, we find strong evidence that earnings revisions can in fact be predicted by means of the sign of the last revision or by using publicly available information such as short interest rates and past revisions. We propose a three-state model that accounts for the very different magnitude and persistence of positive, negative and `no change' revisions and find that this model forecasts earnings revisions significantly better than an autoregressive model. We also find that our forecasts of earnings revisions predict the actual earnings figure beyond the information contained in analysts' earnings estimates. Finally, the empirical literature on financial analysts' forecast revisions of corporate earnings has focused on past stock returns as the key determinant. The effects of macroeconomic information on forecast revisions is widely discussed, yet rarely tested in the literature. In the third chapter, we use dynamic factor analysis for large data sets to summarize a large cross-section of macroeconomic variables. The estimated factors are used as predictors of the average analyst's forecast revisions for different sectors of the economy. Our analysis suggests that factors extracted from macroeconomic variables do, indeed, improve on the current model with only past stock returns. In trying to explain what drives financial analysts' forecast revisions, the factors representing the macroeconomic environment must be considered to avoid a potential omitted variable problem. Moreover, the explanatory power and direction of such factors strongly depend on the industry in question.
Essays On Financial Analysts And Broker Hosted Conferences
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Author : Yang Wang
language : en
Publisher:
Release Date : 2019
Essays On Financial Analysts And Broker Hosted Conferences written by Yang Wang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
Three Essays On Financial Analysts Performance
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Author : Andreea Moraru-Arfire
language : en
Publisher:
Release Date : 2016
Three Essays On Financial Analysts Performance written by Andreea Moraru-Arfire and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Essays On Financial Analysts Corporate Governance And Capital Markets
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Author : Tianqi Jiang
language : en
Publisher:
Release Date : 2021
Essays On Financial Analysts Corporate Governance And Capital Markets written by Tianqi Jiang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021 with Capital market categories.
Three Essays On Financial Analysts Stock Price Forecasts
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Author : Quoc Tuan Quoc Ho
language : en
Publisher:
Release Date : 2013
Three Essays On Financial Analysts Stock Price Forecasts written by Quoc Tuan Quoc Ho and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
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.
Three Essays On Financial Analysts
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Author : Li, Xi
language : en
Publisher:
Release Date : 2002
Three Essays On Financial Analysts written by Li, Xi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Investment advisors categories.
The first chapter improves on the three controversies in the previous analyst literature: Sample coverage, risk adjustments, and performance measurement. I show that at the aggregate level, analyst portfolios generate significant abnormal returns. However, this abnormal performance is generated mainly within a narrow event window around the recommendation date, with no significant post-event return drift. Individually, a large number of analysts significantly outperform risk-adjusted benchmarks. In addition, performance improves with the number of recommendations issued, the number of stocks covered, and the size of their brokerage firms. All-American analyst ranking of Institutional Investor cannot predict analyst performance. Moreover, analysts with more reputation capital at stake recommend less risky portfolios and deviate less from the herd. The second chapter examines the performance persistence of financial analysts at the quarterly, semiannual, and annual intervals in both a two-period and a multi-period framework. The results reveal one-period ahead performance persistence for financial analysts' buy recommendations, which is invariant to testing methodologies, portfolio weighting schemes, return measurement intervals, and risk adjustments. The results also suggest that this performance persistence is more pronounced for raw returns than for risk-adjusted returns and is largely attributable to past winners rather than losers. The third chapter investigates the relation between three important career concerns of financial analysts and their investment recommendation performance. It provides an understanding of different career concerns and evidence relevant to the current policy debate on reforming analyst compensation structure to reduce bias. I find that reputation and recognition are much more important than performance and efforts for Institutional Investor all-star ranking. In contrast, performance and efforts are the most important for Wall Street Journal all-star ranking. Reputation and recognition only have effects for Wall Street Journal non-all-stars to be elected, and performance is the most important for both non-all-stars and all-stars. Career termination provides some extra incentive for better performance and efforts, although it also depends on reputation and recognition.