Business, Management and Accounting
4 years ago

Analysts' reluctance to issue unfavorable info impacts stock recommendations and forecasts.

Journal of Accounting Research
Self-Selection and Analyst Coverage
Maureen F. McNichols, Patricia C. O’Brien

Paper Summary

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The article explores how analysts decide to give recommendations and forecasts for stocks based on their knowledge of the stock's future. It suggests that analysts might avoid sharing negative information to protect their relationships with companies. This behavior could affect the accuracy of recommendations and forecasts.