Abstract
Using a sample of Chinese analysts’ recommendations from 2005 to 2010, we find the following results: first, on average, the recommendations of Chinese security analysts have investment value; second, buy recommendations from star analysts have more investment value than those of non-star analysts. These results suggest that analysts do have some expertise. This research makes several contributions to the field: first, it can assist the more efficient allocation of economic resources; second, it investigates Chinese analysts’ expertise; third, it can help investors to select valuable recommendations to form portfolios; and fourth, it can help brokerage houses to evaluate the output of research departments.
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This paper is sponsored by the National Natural Science Fund (71272221, 71172141) and is part of the results of the Shanghai Science and Technology Commission Research Project (13R21421500). It is also funded by the “Pilot Reform of Accounting Discipline Clustering” and “Joint Construction Project” of the Beijing Municipal Commission of Education and the Project 211 of the Central University of Finance and Economics. We would like to thank Prof Cong Wang and Prof Yong Yang from the Chinese University of Hong Kong and Prof Zheng Sun, Prof Zengquan Li, and Prof Qinlu Jin from the Shanghai University of Finance and Economics for their valuable comments.
PhD, Postdoctoral Student of the Joint Program of School of Economics at Fudan University and Shanghai Stock Exchange.
PhD, Corresponding Author, Researcher at the China Financial Futures Exchange. Email: lilucf@163.com.
PhD, Associate Professor, School of Accountancy, Central University of Finance and Economics. Email: yschen@cufe.edu.cn.
CLC Codes: F230, F275, F832
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Yang, E., Li, L. & Chen, Y. Analysts’ Recommendation Revisions and Investment Value. China Account Financ Rev 16, 3 (2014). https://doi.org/10.7603/s40570-014-0003-5
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DOI: https://doi.org/10.7603/s40570-014-0003-5