Why Analysts Just Piggyback Market Information——Empirical Study and Governance Mechanism Based on Market Reaction
Jiao Chen · China Industrial Economy · 2011
For the recent years,the quality of security analysts' reports is widely questioned by investors.By using an event-study method,this paper carries out an empirical study on market reactions of 5998 research reports with a time-span from Jan 1st,2006 to Dec 31th,2010.The study results imply that the analysts' recommendation indeed piggyback the information existed in the market.The piggybacking behavior result in providing limited new information,rely on which,the investors could barely reap excessive returns.The extensive running mode of research department of security firms,frequent turnover of security analysts and career concerns of young security analysts are all the primary causes for security analysts reiterating information and dissatisfactory information quantity and quality.On this basis,this paper discusses on relative supervision and regulation procedure through three aspects such as supervision watchdog,industry association and analysts themselves.