Publication Type
PhD Dissertation
Version
publishedVersion
Publication Date
1-2022
Abstract
Institutional investors, the most important consumer of analyst research, consistently rank industry knowledge as the most important attribute of analysts. Despite this, little is known about how investors measure industry knowledge since analyst output which can be evaluated objectively is usually associated with firm-level outcomes such as earnings forecasts or price targets. Comprehensive data are recently available for analyst forecasts of key performance indicators (“KPIs”), firm-performance metrics specific to a particular industry. Whereas reactions to earnings forecasts and other firm-level outputs only inform us about analyst skill in firm-level predictions, stock-price reactions to forecast revisions of industryspecific KPIs can proxy for industry-specific expertise of sell-side analysts. I find that stockprice reactions to KPI forecast revisions are economically meaningful and statistically significant, even when accounting for contemporaneous stock recommendation changes and earnings forecast revisions. These reactions are stronger for KPI forecast revisions that jump over the prior consensus, and for same-store sales forecast revisions on retail stocks.
Keywords
Sell-side analysts, Industry expertise, Key performance indicators, KPIs
Degree Awarded
PhD in Business (General Management)
Discipline
Finance | Finance and Financial Management
Supervisor(s)
LOH, Kiat Roger
Publisher
Singapore Management University
City or Country
Singapore
Citation
DEARTH, Matthew Louis.
The Industry expertise of sell-side equity analysts. (2022).
Available at: https://ink.library.smu.edu.sg/etd_coll/391
Copyright Owner and License
Author
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.