Buys, holds, and sells: The distribution of investment banks' stock ratings and the implications for the profitability of analysts' recommendations

• 成果类型: Article
• 署名作者: Barber, BM; Lehavy, R; McNichols, M; Trueman, B
• 署名单位: University of California System; University of California Los Angeles; University of California System; University of California Davis; University of Michigan System; University of Michigan; Stanford University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2005.10.001
• 发表日期: 2006
• 关键词: performance; arbitrage; returns

摘要

This paper analyzes the distribution of stock ratings at investment banks and brokerage firms and examines whether these distributions can predict the profitability of analysts' recommendations. We document that the percentage of buys decreased steadily starting in mid-2000, likely due, at least partly, to the implementation of NASD Rule 2711, requiring the public dissemination of ratings distributions. Additionally, we find that a broker's ratings distribution can predict recommendation profitability. Upgrades to buy (downgrades to hold or sell) issued by brokers with the smallest percentage of buy recommendations significantly outperformed (underperformed) those of brokers,with the greatest percentage of buys. (c) 2005 Elsevier B.V. All rights reserved.