Who was informative? Performance of foreign and local analysts' stock recommendations during the Asian financial crisis

Author's Department

Management Department

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https://doi.org/10.1016/j.ribaf.2013.03.001

Document Type

Research Article

Publication Title

Research in International Business and Finance

Publication Date

8-1-2013

doi

10.1016/j.ribaf.2013.03.001

Abstract

This paper examines the performance of foreign and local analysts' stock recommendations in Indonesia, Malaysia, Thailand, and South Korea during the financial crisis of 1997-1998. Unlike most of the prior studies, our results provide strong evidence that neither of the two groups held a complete information advantage over the other during the period of crisis. Using a large dataset of analysts' recommendations, we show that foreign analysts' buy recommendations were more informative than local analysts' buy recommendations, while the opposite held for sell recommendations, i.e. local analysts' sell recommendations were more informative than foreign analysts' sell recommendations. Our results provide evidence that neither of the frequently advanced explanations regarding relative performance of foreign and local analysts hold during the period of extreme uncertainty. © 2013 Elsevier B.V.

First Page

61

Last Page

76

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