Journal of Corporate Finance Vol. 69 2021
Salient anchor and analyst recommendation downgrade
Abstract
We find that analysts are more likely to downgrade stocks when prices approach the 52-week high. The results are stronger for stocks with higher information asymmetry but moderated by analysts' reputation, work experience, and educational background. We also find a strategy that shorts stocks with recommendation downgrades is less profitable for the downgrades near 52-week high than for other downgrades. Moreover, these downgraded firms with prices near 52-week high subsequently experience relatively less negative earnings forecast revisions. These results suggest that these downgrade decisions are less likely to be information-driven and consistent with our anchoring interpretation.
- DOI
- 10.1016/j.jcorpfin.2021.102033
- Volume
- 69
- Pages
- 102033
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref