The performance of UK stock recommendation revisions: Does brokerage house reputation matter?

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  • The performance of UK stock recommendation revisions Does brokerage house reputation matter

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  • Chen Su
    University of Newcastle
  • Nathan Lael Joseph
    Coventry University, UK
Our study examines the impact of brokerage house (BH) reputation on the performance of investment strategies following stock recommendation revisions in the UK stock market. We develop two alternative proxies for BH reputation based either on the past positions on the annual Institutional Investor (II) All-Europe Research Team or on the past recommendation performance of BHs. We find that BH reputation proxied by the past II rankings has no significant impact on the recommendation performance, suggesting that the II rankings are largely “popularity contests”. However, BH reputation proxied by the past year recommendation performance of BHs has a significantly positive impact on the recommendation performance in the next year, implying that the recommendation performance of BHs in the UK market is persistent. The bootstrap simulations further confirm that the observed performance persistence could be due to BH skill rather than BH luck (i.e., random chance).
Iaith wreiddiolSaesneg
CyfnodolynInternational Journal of Finance and Economics
Dyddiad ar-lein cynnar19 Hyd 2020
Dynodwyr Gwrthrych Digidol (DOIs)
StatwsCyhoeddwyd - 1 Gorff 2022
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