Citation:Choudhry, T., Nandi, M., Jayasekera, R., Dassanayaka, G. and Vigne, S. 2016. The Impact of Analysts’ Stock Recommendations on the Hong Kong Stock Market. In Proceedings of the 2nd International Conference in Accounting Researchers and Educators (ICARE 2016), 11th January 2017. Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka.
Date:2016
Abstract:
Analysts’ recommendations play an important role in providing significant
information to market participants in the stock market. This paper examines
the short-term price impact of analysts’ recommendations (upgrades,
downgrades and initiations) on major stocks in the Hong Kong stock market
from 2009 to 2014. Our findings show that on average, recommendation
upgrades convey substantial and permanent information to the market and
result in significantly positive abnormal returns. On the other hand,
recommendation downgrades generate even larger price impacts surrounding
the announcement day. This implies that recommendation downgrades deliver
more significant information to the stock market than upgrades. Our results
provide evidence in favour of the markets’ significant reaction to predictions
from stock analysts during and after the announcement day taking into account
market conditions.
