出版社：LLC “Consulting Publishing Company “Business Perspectives”
摘要：This study examines the association between analysts'decision on initiating or discontinuing coverage and future firm performance.We use both accounting earnings and stock return to measure firm performance.First,we find that the initiation coverage event itself signals for more favorable information on future earnings performance of newly added stocks with non-negative ratings of "Buy” or "Hold”,and more favorable information on excess stock return for the first post-rating month of newly added stocks with non-negative ratings of "Strong Buy”,"Buy”,or "Hold”.Second, we find that future earnings performance significantly differentiates between those two or five ordinal categories of final ratings on subsequently dropped stocks,and that the more negative the final ratings,the lower the future earnings performance.Third,we find that the discontinuation coverage event itself signals for some unfavorable information on future earnings performance that has not been reflected in the final ratings of "Strong Buy”,"Buy”,"Hold”,or "Sell” on subsequently dropped stocks.Overall,this study documents evidence that analysts'initiating or discounting coverage activity itself has incremental informativeness on future firm performance of the newly added stocks or subse?quently dropped stocks.These results provide somewhat implications for investors that it may be beneficial to incorpo?rate analysts'initiating or discounting coverage activity into investment portfolios.
