Research On The Value Of Stock Recommendation And The Accuracy Of Profit Forecast Released By Securities Analyst

Domestic magazine named new wealth, which draw a lessons from the practice of institutional investors journal in the United States, launched by institutional investors voted on capital market "best analyst" every year in mainland China. At present, the campaign has become the most authoritative selection activities in security analyst industry and an important external incentives in sell-side analysts industry. In the selection of the award-winning analyst is often referred to as the "star analyst", as the campaign influence growing, the point of "star analyst" view hundreds of billions of institutional investors in the market, and it also influenced the money flows in the market, meanwhile the effectiveness of the proposed mechanism is also make a great focus and doubt by public. So do the new wealth best analysts have a edge relative to the other analysts? This article attempts to contrast the quality of the information released by the analyst between star analyst and non-star analyst, thus to answer a question that whether the incentive mechanism effectively.Abroad, there have been a confirm which is analyst ranking performance has significant positive correlation with information in scholars’ studies. So, do star analyst’s ability really better than the non-star analyst? For the above subject, foreign scholars have done a lot of in-depth study, accumulated thousands of literature. However, due to the immaturity professional securities analyst team and the difficulties of securities analyst stock rating data acquisition at our country in the past, the research about star analyst is less, also has not yet been fully expanded.In recent years, with the specification and the development of the securities market in our country, a lot of statistics, the scale of the securities analyst expanded rapidly, study number increasing, and the influence is also growing. This paper reference the Womack (1996), the barber’s (2009) research methods, collecting the a-share market from the147financial institutions in more than170000analysts recommend rating data as sample, as well as the data of "new wealth" selected from42financial institutions in the industries of31areas covered more than360data best analysts, these best analysts’ research areas are mainly distributed in31different industries. Further by using the method of event study, regression analysis of empirical research. In this paper, the study found that star analyst of investment value of the stock rating is higher than the overall sample stock rating star analysts and investment value, and there is a best time to buy and sell on the use of recommendation. Research also suggests that there is a widespread leak phenomenon at the securities recommend rating information released by analyst, can be seen from the empirical results, even if there is information leakage, the situation of star analyst is more serious relative to the non-star analyst. In this paper, we compared the earnings forecasts ability between star analyst with non-star analyst by using2005-2012analyst earnings forecasts data. And star analyst earnings forecast accuracy will also significantly higher than that of non-star analyst. The research results show that in general the new wealth best analysts’ information quality is higher than other analysts, thus investors can trust the information released by star analysts to a certain extent.The discussion of above problems have a certain significance for both academics and investors. Commend for academic, through the profit forecast accuracy and stock investment value to demonstrate whether "star" analysts have a superb ability to analyze and predict the market than "the non-stars". Through the star rating analysts recommend the prediction accuracy of investment value and surplus analysis, can add new empirical evidence to debate between the efficient market hypothesis and behavioral finance from another Angle. Categorizing analysts compare the view on the recommend ratings, looking for excess returns by Capm model and Fama-France three factor model analysis, can say that from the perspective of a relatively new research securities analysts predict ability, has certain reference significance. For investors, this paper studies help investors answer the debts about selection from new wealth magazine to a certain extent, and also help investors using the information released by analysts more accurately.