Are U.S. Analysts’ Recommendation Changes for Cross-Listed Stocks More Informative than Local Analysts’?

Amel-Zadeh, Amir and Della Bina, Antonio Carlo Francesco (2016) Are U.S. Analysts’ Recommendation Changes for Cross-Listed Stocks More Informative than Local Analysts’? Said Business School Working Paper 2016-28.

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Abstract

We investigate stock return and trading volume reactions to analyst recommendation changes issued by local and foreign analysts for international stocks from 40 countries cross-listed in the U.S. We find that recommendation changes by analysts based in the U.S. lead to significantly higher abnormal returns and lower abnormal volumes in the home market of the cross-listed firm, compared to changes made by local analysts. Our results are strengthened by an identification strategy that relies on analysts who move locations. We do not find evidence that the U.S.-location premium to analyst recommendations can be explained by a bonding or certification role of U.S. analysts or differences in broker or analyst characteristics. Our findings suggest that U.S. analysts facilitate U.S. investors’ access to investments in the foreign firm’s home market. U.S. analysts seem to improve the information environment and stock return responsiveness of cross-listed firms, in particular for firms from developed countries where the local analyst advantage is smaller.

Item Type: Oxford Saïd Research Paper
Keywords: International cross-listing, analyst recommendations, location advantage, informativeness, trading volume, finance
Subject(s): Finance
Private equity
Date Deposited: 05 Dec 2016 14:52
Last Modified: 22 Feb 2017 15:17
Funders: N/A
URI: http://eureka.sbs.ox.ac.uk/id/eprint/6257

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