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Who to trust? Reactions to analyst recommendations of domestic versus foreign brokerage houses in a developing stock market

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  • Tiniç, Murat
  • Tanyeri, Başak
  • Bodur, Mehmet

Abstract

Announcement day abnormal returns around analyst recommendations of upgrades average 35 and downgrades average -45 basis points in Borsa Istanbul. The nationality of the investment bank issuing the recommendation affects the magnitude of the stock market reaction. The absolute magnitude of abnormal returns upon upgrade and downgrade recommendations of foreign investment banks is larger than that of local investment banks. The differential reaction indicates that in a developing market country, Turkey, investors pay closer attention when the source of information is foreign rather than local.

Suggested Citation

  • Tiniç, Murat & Tanyeri, Başak & Bodur, Mehmet, 2021. "Who to trust? Reactions to analyst recommendations of domestic versus foreign brokerage houses in a developing stock market," Finance Research Letters, Elsevier, vol. 43(C).
    • Handle: RePEc:eee:finlet:v:43:y:2021:i:c:s1544612321000313
    DOI: 10.1016/j.frl.2021.101950
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    More about this item

    Keywords

    Information transmission; Analyst recommendations; Brokerage houses; Market response; Event study;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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