Analysts’ Recommendations: Evidence from a Portuguese Investment Bank

• Type: Article in National Scientific Journal
• Date: 2005

Authors

João Ribeiro (Author) Other; Rúben Barreto (Author) Other; Ana Paula Serra (Author) FEP

Journal

Title: Review of Financial Markets

Vol. VII No. 1

Pages: 5-29

ISSN: 0874-1964

Publisher: CEMAF - ISCTE

Scientific classification

CORDIS: Social sciences

Other information

Abstract (EN): We assess the performance of a few trading strategies based on a sample of 139 analysts’ recommendations made public by a Portuguese investment bank’s research department. We address whether stock picking strategies on the basis of these recommendations were effective tools for stock selection. Our results suggest that these recommendations have not been useful for stock selection. Most of the recommendation-based strategies we have built generated negative significant performance. We tested the robustness of these findings over time and across industries. We find that the recommendation-based strategies appear to be more effective for selection of Portuguese stocks, which can reflect a comparative home advantage: Portuguese analysts may have better skills in selecting Portuguese stocks rather than foreign stocks.

Language: Portuguese

Type (Professor's evaluation): Scientific