TY  - JOUR
AU  - Asquith,Paul
AU  - Mikhail,Michael B.
AU  - Au,Andrea S.
TI  - Information Content of Equity Analyst Reports
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9246
PY  - 2002
Y2  - October 2002
UR  - http://www.nber.org/papers/w9246
L1  - http://www.nber.org/papers/w9246.pdf
N1  - Author contact info:
Paul Asquith
MIT Sloan School of Management
100 Main Street, E62-660
Cambridge, MA 02142
Tel: 617/253-7177
Fax: 617/253-0603
E-Mail: pasquith@mit.edu

Michael Mikhail
E-Mail: mmikhail@duke.edu

Andrea Au
Massachusetss Institute of Technology
E-Mail: andreau@alum.mit.edu
AB  - This paper investigates the market reaction to the information released in security analyst reports. It shows that the market reacts significantly and positively to changes in recommendation levels, earnings forecasts, and price targets. While changes in price targets and earnings forecasts both provide information to the market, revisions in price targets have a larger and more significant impact than comparable revisions in earnings forecasts. The text of the report is also a significant source of information as it provides the justifications supporting an analyst's summary opinion. When all of this information is considered simultaneously, some of it, notably the earnings forecasts, is subsumed. The results further show that analysts correctly predict price targets slightly over 50% of the time. Finally, the valuation methodology used does not seem to be correlated with either the market's reaction or the analyst's accuracy.
ER  -