Title

Equity Analyst Recommendations: A Case for Affirmative Disclosure

Document Type

Article

Publication Date

Spring 2014

Abstract

The financial well-being of retail investors is impacted by the quality of their investment decisions. Inaccurate or misleading financial information that is misconstrued by investors to be reliable can compromise decision making. This research reports on the results of three studies that show despite the fact that equities with “buy” ratings significantly underperform equities with “hold” ratings, retail investors rely on them when making investment decisions. It also shows analysts' guidance remains inaccurate in the aggregate despite the passage of Sarbanes-Oxley and related legislation/regulation. This article begins a conversation on the implications of this dilemma, specifically the value of affirmative disclosure as a remedy.

Publication Title

Journal of Consumer Affairs

Volume

48

Issue

1

First Page

96

Last Page

123

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