Is the financial information still useful in issuing stock recommendations? Evidence from the Tunisian financial analysts

This study aims to determine the relevance of different information types in explaining financial analysts' recommendations concerning Tunisian listed firms. Three hypotheses are proposed and evaluated through a content analysis approach and a logistic regression analysis. Despite the growing importance of non-financial information in recent years, our findings show that financial information has not lost its usefulness. More precisely, buy and hold recommendations refer to the two types of information (leverage, dividend payout, earnings, and market position). In contrast, sell recommendations seem to be particularly associated with the financial one (dividend payout, earnings). As an economic crisis marks the period under study, these results suggest that analysts often use non-financial information to justify producing an unexpected favourable recommendation in a context of distress. They imply that firms, especially those relatively unattractive to investors, can bet on this type of information to hide their gloomy reality. Moreover, the analysts' optimism should be taken into account by investors when making their investment decisions. Finally, accounting policymakers have to improve more and more accounting standards to preserve financial information usefulness.