Stock Recommendations and Recommendations Change of Analysts and Market Response in China

Abstract

Abstract: This paper investigates the historical trend of stock recommendations and recommendations change issued by analysts in China and market response to them. It is found that in 2001-2013 there is an increasing proportion of optimistic ratings (i.e. “buy” and “strong buy”), with “buy” ratings accounting for a larger portion than “strong buy” ratings, analysts tend to change recommendations by upgrading them, and investors respond positively to optimistic ratings and upgrades. The findings imply that in the special situation of China's capital market, financial analysts are more likely to give optimistic ratings and upgrade them, and investors are also more likely to respond positively to optimistic ratings and upgrades.

Key words: stock recommendations, recommendations change, market response

Wang Yutao, Wang Juxian, Zhao Yingxu. Stock Recommendations and Recommendations Change of Analysts and Market Response in China[J]. Management Review, 2021, 33(2): 3-14.

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