Is Sell-Side Research More Valuable in Bad Times?

Roger K. Loh and René Stulz

No 19778, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Because uncertainty is high in bad times, investors find it harder to assess firm prospects and, hence, should value analyst output more. However, higher uncertainty makes analysts’ tasks harder so it is unclear if analyst output is more valuable in bad times. We find that, in bad times, analyst revisions have a larger stock-price impact, earnings forecast errors per unit of uncertainty fall, reports are more frequent and longer, and the impact of analyst output increases more for harder-to-value firms. These results are consistent with analysts working harder and investors relying more on analysts in bad times.

JEL-codes: F14 F20 F24 (search for similar items in EconPapers)
Date: 2014-01
Note: AP CF
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Citations: View citations in EconPapers (11)

Published as LOH, Roger and STULZ, René. Is sell-side research more valuable in bad times?. (2017). Journal of Finance, forthcoming.

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Related works:
Journal Article: Is Sell‐Side Research More Valuable in Bad Times? (2018)
Working Paper: Is Sell-Side Research More Valuable in Bad Times? (2013)
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