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Schwab’s equity ratings: value added or old news?

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  • Ray R. Sturm

    (University of Central Florida)

Abstract

Charles Schwab Inc. appears to expend a great deal of effort analyzing stocks from many perspectives and rating their potential for future returns over a 12-month investment horizon. This study examines whether their analysis explains returns beyond known variables. Schwab’s equity ratings are an interesting dataset to study because their ranking methodology appears to highly correlate with known academic research. Examining an original sample size of 3074 stocks and using the Year 2014 as a test sample, evidence is presented that Schwab’s ex-ante analysis does add explanatory value to ex-post returns, especially in the presence of firm Beta, firm size and a stock’s nearness to its 52-week high.

Suggested Citation

  • Ray R. Sturm, 2017. "Schwab’s equity ratings: value added or old news?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 41(2), pages 257-275, April.
    • Handle: RePEc:spr:jecfin:v:41:y:2017:i:2:d:10.1007_s12197-015-9347-1
    DOI: 10.1007/s12197-015-9347-1
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Portfolio management; Efficient markets;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G19 - Financial Economics - - General Financial Markets - - - Other

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