Value relevance of analysts’ recommendations for small naïve investors : evidence from the Casablanca stock exchange

Dissertant

Mursali, Asma

Thesis advisor

Faruq, Umar

University

Al Akhawayn University

Faculty

The School of Business Administration

University Country

Morocco

Degree

Master

Degree Date

2009

English Abstract

Do financial analysts perform their task of bringing out information about firms efficiently in emerging stock markets? Using analyst recommendations data from the Casablanca Stock Exchange, we examined the link between the issuance of analysts’ recommendations and the subsequent stock adjusted return during the sample period from 2000 to 2007.

The descriptive results document that the frequency of Buy and Strong Buy recommendation is higher than the issuance of Sell and Strong Sell recommendations.

We assume that since the majority of financial analysts work for underwriting firms, it leads them to promote their clients firms’ stocks by issuing more Buy recommendations and lower Sell recommendations.

Also, the result of our statistical analysis showed that analyst’s recommendations in Morocco do not reveal valuable information during the sample period.

This implies that stock prices and returns do not react to analysts recommendations 1, 7, 14, 28, and 56 days following the issuance day.

Unexpectedly, our results show that stock prices decrease in response to Buy recommendations, while they do not show any significant reaction following Sell recommendations.

Our results are robust even after controlling for different firm characteristics and within different time periods.

We propose that analysts and brokerage houses should be subject to proper governance mechanisms in order to safeguard the interests of small/ naïve investors, which will also help in developing investors’ confidence in the market

Main Subjects

Business Administration

No. of Pages

31

Table of Contents

• APA
• MLA
• AMA

Language

English

Data Type

Arab Theses

Record ID

BIM-628782