Reputation Mechanism VS Information Mining Mechanism:How China’s Securities Analysts Influence Market?
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| Title | Reputation Mechanism VS Information Mining Mechanism:How China’s Securities Analysts Influence Market?
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| Author | Zhang Zongxin and Yang Wancheng |
| Organization | Institute for Financial Studies, Fudan University |
| Email | zhangzongxin@fudan.edu.cn； |
| Key Words | Securities Analyst; Star Analyst; recommendation Report; Information Mining Mechanism; Reputation Mechanism |
| Abstract | Whether securities analysts can undertake the responsibility to reconstruct the order of capital market and protect individual investors through providing high-quality recommendation reports with prospective information and popularizing the concept of value investing is an important issue of China’s capital market.On the base of constructing quality index of investment reports,we explore the way securities analysts influence stock market and create value for investors from the perspectives of reputation and fundamental information mining centering on the behaviors of issuing investment reports.Our research shows that star analysts provide significantly more prospective fundamental information in investment reports compared with non-star analysts,which indicates that star analysts guide the market in terms of information mining. Moreover,Analysts exert influence on stock market through reputation mechanism and information mining mechanism.The former one dominates short term stock price while the later one dominates long term stock price. Additionally,information asymmetry reinforces the influence of both reputation mechanism and information mining mechanism while mutual fund holdings intensify information mining mechanism rather than reputation mechanism.What’s more,by analyzing portfolios constructed by consensus rating of analysts,we provide strong evidence that investing according to the recommendations of star analysts can not improve portfolio performances while investment reports with higher quantity of prospective fundamental information contribute higher abnormal return for investors. |
| Serial Number | WP1016 |
| Time | 2016-01-08 |
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