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Modelling analysts’ target price revisions following good and bad news?

Research output: Contribution to journalArticle

Original languageEnglish
Pages (from-to)37-61
Number of pages25
JournalAccounting and Business Research
Volume48
Issue number1
Early online date5 Oct 2016
DOIs
DateAccepted/In press - 15 Aug 2016
DateE-pub ahead of print - 5 Oct 2016
DatePublished (current) - 2 Jan 2018

Abstract

We study the relation between analysts’ target price revisions and recent market returns, excess stock returns, and other analysts’ target price revisions. Empirical results show that, after controlling for earnings forecast and recommendation revisions, target price revisions are associated with each of these information sources. We also find that target price revisions are more sensitive to negative than to positive excess stock returns. We conjecture that firms’ tendency to withhold bad news, while releasing good news promptly, drives this effect and, using proxies for firms’ withholding of bad news, we report evidence supporting this hypothesis.

    Research areas

  • excess stock returns, target price revisions, withholding bad news

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    Rights statement: This is the author accepted manuscript (AAM). The final published version (version of record) is available online via Taylor & Francis at http://www.tandfonline.com/doi/abs/10.1080/00014788.2016.1230485. Please refer to any applicable terms of use of the publisher.

    Accepted author manuscript, 536 KB, PDF document

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