The performance of UK stock recommendation revisions: Does brokerage house reputation matter?

Chen Su, Hanxiong Zhang, Nathan Joseph

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    Our study examines the impact of brokerage house (BH) reputation on the performance of investment strategies following stock recommendation revisions in the UK stock market. We develop two alternative proxies for BH reputation based either on the past positions on the annual Institutional Investor (II) All-
    Europe Research Team or on the past recommendation performance of BHs. We find that BH reputation proxied by the past II rankings has no significant impact on the recommendation performance, suggesting that the II rankings are largely “popularity contests”. However, BH reputation proxied by the past
    year recommendation performance of BHs has a significantly positive impact on the recommendation performance in the next year, implying that the recommendation performance of BHs in the UK market is persistent. The bootstrap simulations further confirm that the observed performance persistence could be due to BH skill rather than BH luck (i.e., random chance).

    Original languageEnglish
    Pages (from-to)3051-3070
    Number of pages20
    JournalJournal of International Finance & Economics
    Issue number3
    Early online date19 Oct 2020
    Publication statusE-pub ahead of print - 19 Oct 2020

    Bibliographical note

    © 2020 The Authors. International Journal of Finance & Economics published by John Wiley & Sons Ltd.

    This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.


    Financial support from the Faculty of Humanities and Social Sciences (HaSS), Newcastle University under the Faculty Research Fund – Autumn 2019 (OSR/0372/FR19/0001).


    • Bootstrap simulations
    • brokerage house reputation
    • financial analysts
    • performance persistence
    • stock recommendation revisions

    ASJC Scopus subject areas

    • Accounting
    • Finance
    • Economics and Econometrics


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