As Mokoaleli-Mokoteli et al. (2009) point out, though, previous research has confirmed that while it is accurate to suggest that analysts provide optimistic reports on the majority of the stocks they include in their analytical portfolios, such recommendations do not routinely affect the market in any substantive way. According to these researchers, "After accounting for risk and transaction costs, investors do not earn better than average returns from following analysts' stock recommendations" (Mokoaleli-Mokoteli et al., 2009, p. 388). There is also the matter of the human propensity to be overly optimistic in those situations where there are complex issues involved, a tendency that has also been well documented in the scholarly research (Mokoaleli-Mokoteli et al., 2009). According to Mokoaleli-Mokoteli and his colleagues, "Both analyst overoptimism, as measured by the tone of their report, and conflicts of interest distinguish between new buy and new sell recommendations. This is consistent with the perception that analysts make reality look better than it is, even though the evidence is that they get the majority of their new buy recommendations wrong" (2009, p. 414). This finding is also consistent with previous research that confirms analysts issue forecasts that are more optimistic based on available incentives (Mokoaleli-Mokoteli et al., 2009).
Conclusion
References
Cao, J. & Kohlbeck, M. (2011). Analyst quality, optimistic bias, and reactions to major news. Journal of…
The following is a chart of what the February 2006 crash looked like, according to Bloomberg.com. Source: Bloomberg.com, 2007 According to Bloomberg, this downward crash had a dramatic effect on the U.S. market as well. When one views this chart, it is no wonder that speculators are divided about the reactions of Saudi Investors. This was a devastating crash for many and it will undoubtedly have a dramatic effect on their decisions
Unethical/Criminal Conduct following the Equities Market Crash 2000 to 2002 This paper is a discussion of the identification and analysis of unethical and criminal conduct following the equities market crash from 2000 to 2002. The paper begins with an Introduction to the problem in Chapter One that also contains the hypothesis for the paper, the definition of terms section, and other valuable information. This information sets up the rest of
Palm IPO Case Discuss whether any biases apply in regard to the Palm IPO to the analysts, investors, management. Yes, biases on multiple fronts were present with all stakeholders involved. I believe it is important to look at these biases in regards to the prevailing market sentiments at the time. During the period directly prior to the IPO, the markets were experiencing excessive optimism in regards to technology stock. Technology stocks during
environmental, social and governance (ESG) performance and financial performance of companies Investors are increasingly recognizing the fact that ESG (environmental, social, corporate governance) elements can substantially affect companies' security rates and financial performance. The aforementioned components' contribution to financial markets has been growing with the rise in number of ESG opportunities and risks within the contemporary international economy. Timely and improved organizational policy-related data access and the effect of organizational
Finance-dominated proponents also maintain that boom economic periods generate a more varied divergence of valuations that fuel merger activity (Medlen 2007). In this regard, Medlen concludes that, "Taken collectively, these understandings may explain some of the merger activity in booms, but they involve certain asymmetries that undercut their explanatory power. High stock valuations allow stock to be utilized as currency and collateral for takeovers; yet stock booms also make
Transgender Employment Discrimination There is a growing body of evidence that transgender individuals frequently experience some type of discrimination during the employment process in the United States today. Although there are only a few high-profile cases, there are a significant number of employment claims being asserted. In terms of numbers, the high was reached in 1994 when almost 92,000 discrimination charges were filed with the Equal Employment Opportunity Commission. Since that
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now