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Isolating the Information Content of Equity Analysts' Recommendation Changes, Post Reg FD
Article first published online: 31 MAR 2008
DOI: 10.1111/j.1540-6288.2008.00195.x
©2008, The Eastern Finance Association
Additional Information
How to Cite
Goff, D., Hulburt, H., Keasler, T. and Walsh, J. (2008), Isolating the Information Content of Equity Analysts' Recommendation Changes, Post Reg FD. Financial Review, 43: 303–321. doi: 10.1111/j.1540-6288.2008.00195.x
Publication History
- Issue published online: 31 MAR 2008
- Article first published online: 31 MAR 2008
- Abstract
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Keywords:
- analyst recommendation changes;
- analyst upgrades;
- analyst downgrades;
- Regulation Fair Disclosure;
- Reg FD;
- disclosure;
- fair disclosure
- G14;
- G24;
- G28;
- G38
Abstract
We investigate the information content of equity analysts' recommendation changes subsequent to the passage of Regulation Fair Disclosure. We find that analyst upgrades (downgrades) are associated with positive (negative) abnormal returns. Overall, stock prices tend to react significantly more strongly to recommendation changes accompanied by news events than to those that are not. Even so, returns around recommendation changes not accompanied by news are significantly different from zero. This result holds after controlling for firm-specific variables and the incidence of multiple simultaneous recommendation changes. We conclude that analyst recommendation changes, in and of themselves, are informative.