Abstract:
It has become more apparent in recent years that equity analysts come under much internal and
external pressure that is likely to dilute the value of their forecasts and recommendations. In this paper
we find, similar to Jegadeesh et al. (Jegadeesh, N., Kim, J., Krische, S., Lee, c., 2004, Analyzing the
Analysts: When Do Recommendations Add Value? Journal of Finance 59, 1083-1124.). that
Australian analysts consistently favour large high momentum growth stocks and that their
recommendations, if anything, have negative value with the exception of those made in relation to
low momentum growth stocks. However, we do find evidence to suggest that changes in the analysts'
recommendations could provide a useful input into one's investment decisions. When we divided our
sample up into the growth market of the late 1990s and the falling market of the early 2000s, we find
that analysts were moving their recommendations (even) more towards high momentum growth stocks
during the boom years but in the opposite direction during the gloom years.
