The impact of analyst sentiment on UK stock recommendations and target prices

Osman Yukselturk, Jon Tucker

Research output: Contribution to journalArticle

2 Citations (Scopus)
8 Downloads (Pure)

Abstract

The aim of this paper is to investigate the relationship between narrative sentiment in analysts' company reports and their recommendation and target price outputs. We study an industry-balanced sample of 275 UK quoted company sell-side analyst reports over the period 2006-2010 using a content analysis methodology to measure net sentiment for a range of themes. We then model analysts' outputs against themed sentiment scores to analyse the impact of the Global Financial Crisis. We find that themed sentiments impact upon analysts' outputs, but their magnitude and direction vary over the pre-crisis, crisis and post-crisis periods. In particular, before the crisis we find a strong negative relationship between the macroeconomic and regulatory environment and report outputs, though this effect diminishes somewhat with the onset of the crisis, to be restored thereafter. Growth sentiment exerts a weak positive impact before the crisis which disappears thereafter. Financial performance sentiment becomes a significant positive driver of outputs following the crisis. There is evidently a "back to basics" approach following the crisis which restores financial fundamentals to the heart of stock analysis. Our findings provide some insight into the thought processes of analysts by identifying the dynamic relation between analysts' outputs and themed sentiments.

Original languageEnglish
Pages (from-to)869-904
Number of pages36
JournalAccounting and Business Research
Volume45
Issue number6-7
DOIs
Publication statusPublished - 11 Nov 2015
Externally publishedYes

Fingerprint

Analysts
Stock recommendations
Sentiment
Target price
Global financial crisis
Sell-side analysts
Methodology
Industry
Regulatory environment
Macroeconomics
Content analysis
Financial performance

Bibliographical note

This is an Accepted Manuscript of an article published by Taylor & Francis in Accounting and Business Research on 11/11/2015, available online: http://www.tandfonline.com/10.1080/00014788.2015.1044496

Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

Keywords

  • analyst recommendations

ASJC Scopus subject areas

  • Accounting

Cite this

The impact of analyst sentiment on UK stock recommendations and target prices. / Yukselturk, Osman; Tucker, Jon.

In: Accounting and Business Research, Vol. 45, No. 6-7, 11.11.2015, p. 869-904.

Research output: Contribution to journalArticle

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