Desperate Times Call for Valuable Measures: Impact of Macro Conditions on Value of Analyst Output in Finland

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School of Business | Bachelor's thesis

Date

2018

Major/Subject

Mcode

Degree programme

Rahoitus

Language

en

Pages

26

Series

Abstract

This paper studies the implications of macroeconomic conditions on the price-impact following analyst output in Finland. In general, bad times make firm prospects more difficult to value, and thus investors should value analyst output more. Conversely, the same uncertainty makes analyzing firm prospects more difficult, and the output less reliable. I find weak evidence for analyst recommendation revisions having a larger stock-price impact in bad times. Equivalently, I find weak evidence for local analysts providing more valuable output and investors’ reliance on analysts increasing in bad times. However, results with an alternative benchmark provide strong evidence for recommendation changes having a larger price-impact in bad times, consistent with analyst output being more valuable in bad times.

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Thesis advisor

Shin, Sean

Keywords

analyst, sell-side, recommendation, price-impact, event study

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