Analysts' Recommendation Rating, Size Effect and Investment Value

摘要

In this paper, we have used the analysts' stock rating samples from 35 brokers between 2006 and 2008 to test whether the average analysts' stock rating and absolute size group can help investors to forecast the profit potential of analysts' recommendations, our research results show that after grouping by size, the information of analyst's stock rating have important reference value for investors. When analyst's average rating is "Strong buy" or "buy", investors should place priority on big size stocks to gain higher return. The amount of analysts' "sell" or "Strong sell" rating is low, but they have high information content and important reference value. Especially when analysts' recommendations are "sell" or "strong sell" on small size stocks, investors should sell or avoid buying them.