The role of the business press in the pricing of analysts’ recommendation revisions
We investigate the information-dissemination role of the business press by examining the coverage of analyst recommendation revisions. Consistent with the press providing wider dissemination of analyst reports, we find evidence that coverage of analyst recommendation revisions significantly increases the initial market reaction to these revisions and decreases the subsequent price drift. Furthermore, we find that news flash coverage, rather than in-depth coverage, of a recommendation revision drives both the initial market reaction results and drift results. Finally, we show that broader press coverage influences the activities of large-trade institutional investors but not high-frequency traders. Overall, our findings suggest a complementary role between analysts and the business press: increased dissemination of recommendation revisions, rather than information creation on the part of the business press, serves to better inform the market about analyst recommendation revision decisions.
KeywordsAnalyst recommendations Business press Market reactions
JEL CodesM41 L82 G14
We thank Artur Hugon, Derrald Stice, Jake Thornock, Brady Twedt, Andrew Van Buskirk, Roger White, and workshop participants at Arizona State University. All mistakes are our own.
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