Publication Type
Working Paper
Version
publishedVersion
Publication Date
3-2025
Abstract
Different brokers employ a variety of stock recommendations rating systems. There are five- and three-tier systems, as well as different mappings from the economic meaning of recommendations to numerical values in popular data sets such as IBES. We show that the rating systems and their mappings have important implications on the distribution of stock recommendations, investors’ reactions to stock recommendations, the consensus and dispersion of stock recommendations, and measures of analysts’ herding and boldness. We demonstrate how one can control for the variation in rating systems in order to separate the true economic impact of recommendations from the mechanical, non-economic, effect of their coding.
Keywords
Financial analysts, stock recommendations, consensus recommendations
Discipline
Finance and Financial Management
Research Areas
Finance
First Page
1
Last Page
61
Publisher
SSRN
Citation
KADAN, Ohad; MADUREIRA, Leonardo; WANG, Rong; and ZACH, Tzachi.
Sell-side analysts’ rating systems. (2025). 1-61.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7813
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.