Publication Type

Journal Article

Version

acceptedVersion

Publication Date

1-2020

Abstract

Sell-side analysts employ different benchmarks when defining their recommendations. A buy for some brokers means the stock is expected to outperform its industry, while for other brokers it means the stock is expected to outperform the market, or some return threshold. We show that these stated benchmarks have implications for the distribution of recommendations, price reactions to recommendations, and the investment value of recommendations. We conclude that, depending on the question, academics may need to account for the benchmarks when studying analysts’ outputs, and investors may find the benchmarks beneficial in interpreting analysts’ advice.

Keywords

Analysts, Benchmarks, Recommendations

Discipline

Finance and Financial Management | Portfolio and Security Analysis

Research Areas

Finance

Publication

Accounting Review

Volume

95

Issue

1

First Page

211

Last Page

232

ISSN

0001-4826

Identifier

10.2308/accr-52446

Publisher

American Accounting Association

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.2308/accr-52446

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