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Bridge over ocean
1 May 2000 Financial Analysts Journal Volume 56, Issue 3

Do All-Stars Shine? Evaluation of Analyst Recommendations

  1. Hemang Desai
  2. Bing Liang
  3. Ajai K. Singh

Using a unique data set, we studied the performance of stock recommendations made by Wall Street Journal all-star analysts. We document that stocks recommended by the all-star analysts outperform benchmarks controlled for size and industry. Stocks recommended by analysts who focus on a single industry outperform those recommended by analysts covering multiple industries. We also document a herding behavior among analysts in an industry. Unlike previous studies that found superior analyst performance only for small-cap stocks, our results indicate that superior performance also exists for large-cap stocks.

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