Study on the Decision Value of Analysts' Recommendations
COMPUTER MODELLING & NEW TECHNOLOGIES 2014 18(3) 224-230
Business Administration School of Henan University, Kaifeng City, Henan Province, China, 475004
This paper documents a relationship between analysts' recommendations and the stock price reaction in China. Using a new methodology that combines the event of stock dividends and transfer of reserves to common shares, the author provides evidence of the decision value of analysts' recommendations that is different from the mature market. The results show that analysts' cumulative rating values positively relate to the cumulative abnormal returns. Favourable ratings result in the lower cumulative abnormal returns. The cumulative number of analyst rating agencies negatively relates to the cumulative abnormal returns. In general, analysts' information does not bring abnormal returns for investors.