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Who was informative? Performance of foreign and local analysts’ stock recommendations during the Asian financial crisis

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  • Farooq, Omar

Abstract

This paper examines the performance of foreign and local analysts’ stock recommendations in Indonesia, Malaysia, Thailand, and South Korea during the financial crisis of 1997–1998. Unlike most of the prior studies, our results provide strong evidence that neither of the two groups held a complete information advantage over the other during the period of crisis. Using a large dataset of analysts’ recommendations, we show that foreign analysts’ buy recommendations were more informative than local analysts’ buy recommendations, while the opposite held for sell recommendations, i.e. local analysts’ sell recommendations were more informative than foreign analysts’ sell recommendations. Our results provide evidence that neither of the frequently advanced explanations regarding relative performance of foreign and local analysts hold during the period of extreme uncertainty.

Suggested Citation

  • Farooq, Omar, 2013. "Who was informative? Performance of foreign and local analysts’ stock recommendations during the Asian financial crisis," Research in International Business and Finance, Elsevier, vol. 29(C), pages 61-76.
    • Handle: RePEc:eee:riibaf:v:29:y:2013:i:c:p:61-76
    DOI: 10.1016/j.ribaf.2013.03.001
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    More about this item

    Keywords

    Asian financial crisis; Analyst recommendations; Foreign analysts; Local analysts; Performance; Information advantage;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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