Do Analysts Practice What They Preach and Should Investors Listen? Effects of Recent Regulations

• 成果类型: Article
• 署名作者: Barniv, Ran; Hope, Ole-Kristian; Myring, Mark J.; Thomas, Wayne B.
• 署名单位: University System of Ohio; Kent State University; Kent State University Kent; Kent State University Salem; University of Toronto; Ball State University; University of Oklahoma System; University of Oklahoma - Norman
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2009.84.4.1015
• 发表日期: 2009
• 页码: 1015-1039
• 关键词: EARNINGS FORECASTS; FAIR DISCLOSURE; STOCK; recommendations; INFORMATION; MARKET; profitability; performance; valuation; accuracy

摘要

From 1994 to 1998, Bradshaw (2004) finds that analysts' stock recommendations relate negatively to residual income valuation estimates (scaled by current price) but positively to valuation heuristics based on the price-to-earnings-to-growth ratio and long-term growth. These results are surprising, especially considering that future returns relate positively to residual income valuation estimates and negatively to heuristics. Using a large sample of analysts for the 1993-2005 period, we consider whether recent regulatory reforms affect this apparent inconsistent analyst behavior. Consistent with the intent of these reforms, we find that the negative relation between analysts' stock recommendations and residual income valuations is diminishing following regulations. We also show that residual income valuations, developed using analysts' earnings forecasts, relate more positively with future returns. However, we document that stock recommendations continue to relate negatively with future returns. We conclude that recent regulations have affected analysts' outputs-forecasted earnings and stock recommendations-but investors should be aware that factors other than identifying mispriced stocks continue to influence how analysts recommend stocks.