The Value of Client Access to Analyst Recommendations

42 Pages Posted: 6 Oct 2003

See all articles by T. Clifton Green

T. Clifton Green

Emory University - Department of Finance

Date Written: February 2004

Abstract

Early access to stock recommendations provides brokerage firm clients with incremental investment value. After controlling for transaction costs, purchasing (selling) following upgrades (downgrades) results in average two-day returns of 1.02% (1.50%). Short-term profit opportunities persist for two hours following the pre-market release of new recommendations. A calendar-based strategy produces annualized returns of over 30% and the results are robust within sub-periods. Recommending firms' market makers shift their quotes accordingly, providing indirect evidence that clients make use of their short-term informational advantage.

JEL Classification: G14, G24

Suggested Citation

Green, T. Clifton, The Value of Client Access to Analyst Recommendations (February 2004). Available at SSRN: https://ssrn.com/abstract=438725 or http://dx.doi.org/10.2139/ssrn.438725

T. Clifton Green (Contact Author)

Emory University - Department of Finance ( email )

1300 Clifton Rd.
Atlanta, GA 30322-2710
United States
404-727-5167 (Phone)
404-727-5238 (Fax)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
602
Abstract Views
4,009
Rank
82,472
PlumX Metrics