A Study of Investment Performance and Impact of Stock Analysts’ Recommendations

Abstract

Information Available in the market is an important source for
making investment in the stock market. The objective o f this study is
to examine the value o f analysts' services fo r investors and explore the
presence o f announcement effects o f their recommendations on the
stock market return behaviour. This study considers 222 buying
recommendations and covers the time period from July 4, 2005 to
December 31, 2007. The present study uses the Sharpe Performance
Measure to capture the impact o f analysts' recommendations over
the investment performance. This study shows the absence o f
association between abnorm al return and the recommendations
provided by the equity analysts. However, some interesting results in
case o f holding period suggest that one week holding period
follow ing the recomm endations provides inferior investment
performance while one year holding period yields highest inferior
in vestment performance.