{"title":"Performance, Herding, and Career Concerns of Individual Financial Analysts","authors":"Xi Li","doi":"10.2139/ssrn.300889","DOIUrl":"https://doi.org/10.2139/ssrn.300889","url":null,"abstract":"Using a new database of stock recommendations with substantially expanded coverage of brokerage firms and individual analysts, I examine the performance of portfolios recommended by individual analysts. The analysis allows a more accurate measurement of analyst performance with extensive risk adjustments. I show that at the aggregate level, analyst portfolios generate significant abnormal returns. Individually, a large number of analysts significantly outperform risk-adjusted benchmarks and there are at least twice as many analysts who significantly outperform as analysts who significantly underperform benchmarks. Abnormal performance is generated mainly within a narrow event window from two trading days before the recommendation date to five trading days later, with no significant post-event return drift. In addition, analyst performance improves with the number of recommendations issued, the number of stocks covered, and the size of their brokerage firms. However, performance declines as their coverage goes beyond 12-13 stocks. All-American analyst ranking of Institutional Investor cannot predict analyst performance. Moreover, analysts career concerns have significant impact on their behavior. Analysts with more reputation capital at stake recommend less risky portfolios and deviate less from the herd. Analyst behavior is also predictable on the basis of several other characteristics. Furthermore, I provide evidence for the current debate on how to reform analyst compensation. I find although the II all-star ranking is significantly related to performance, it is affected more by recognition factors and reputation factors. Its capacity to serve as a performance-based evaluation system for analyst compensation is quite limited.","PeriodicalId":372394,"journal":{"name":"EFA 2002 Berlin Meetings Discussion Papers (Archive)","volume":"150 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-01-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123245112","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The New Basle Accord: Which Implications for Monetary Policy Transmission?","authors":"A. Baglioni","doi":"10.2139/ssrn.299392","DOIUrl":"https://doi.org/10.2139/ssrn.299392","url":null,"abstract":"The model shows how monetary policy affects the supply of bank loans, highlighting the difference between bank reaction to a monetary shock in the short run (fixed equity) and in the long run (endogenous equity). Results: I) Capital requirements matter, even if banks are well capitalized: the impact of monetary policy increases in the long run, when banks adjust their equity to the new level of market interest rates. II) Under the New Basle Accord, monetary policy has perverse effects on riskier borrowers, when banks lack equity: an expansionary policy leads to a contraction of bank loan supply to them.","PeriodicalId":372394,"journal":{"name":"EFA 2002 Berlin Meetings Discussion Papers (Archive)","volume":"28 5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114118852","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Association between Accounting Earnings and Stock Returns as a Measure of Value Relevance of Accounting Standards: Empirical Evidence from the Swiss Market","authors":"Levon Babalyan","doi":"10.2139/ssrn.301923","DOIUrl":"https://doi.org/10.2139/ssrn.301923","url":null,"abstract":"This study compares the informational content of accounting earnings reported by Swiss companies under the standards generally accepted in Switzerland and earnings reported under the International Accounting Standards and US GAAP. I examine the relative explanatory power and earnings response coefficients in regressions of reported numbers on market returns of the companies listed on the Swiss Stock Exchange and presenting financial statements under these different accounting frameworks. After controlling for firm size, foreign market listing, audit quality and sensitivity to some variable specifications, the obtained results suggest that a claim of compliance to IAS by a listed Swiss company does not necessarily imply that its earnings numbers are more value-relevant than if reported under Swiss standards. The company size and audit quality proved to be significant factors for the quality of reported numbers. The empirical results also confirm the hypothesis that firms reporting under US GAAP provide more informative earnings numbers. This confirmation, however, must be interpreted with caution because of the small sample size and high presence of these US GAAP firms on foreign stock markets.","PeriodicalId":372394,"journal":{"name":"EFA 2002 Berlin Meetings Discussion Papers (Archive)","volume":"82 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2001-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114245784","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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