When Analysts Talk, Do Institutional Investors Listen? Evidence from Target Price Changes

2016 ◽  
Vol 51 (2) ◽  
pp. 191-223 ◽  
Author(s):  
Shannon Lin ◽  
Hongping Tan ◽  
Zenan Zhang
Keyword(s):  
Institutional Investors ◽  
Target Price ◽  
Price Changes

scholarly journals High volume trades and stock price changes in Brazil

2013 ◽  
Vol 11 (1) ◽  
pp. 92-101
Author(s):  
Andre Carvalhal ◽  
Cesar Martins ◽  
Otavio Figueiredo
Keyword(s):  
Institutional Investors ◽  
Stock Prices ◽  
Stock Price ◽  
High Volume ◽  
International Studies ◽  
Significant Relation ◽  
Price Changes ◽  
Available Information

This work analyzes the relation between stock price changes and high volume trades in Brazil. Using a unique intra-day database, we evaluate 10 of the most liquid shares from 2001 to 2006. Unlike most international studies, which are based on data from funds or institutional investors, this article breaks new ground by working with publicly available information. Our results indicate a positive and significant relation between stock price changes and high volume trades. In line with existing literature, we show there are both temporary and partially permanent on stock prices after high volume trades. Our study also indicates the existence of asymmetry between purchases and sales.

scholarly journals How Do Institutional Investors Interact With Sell-Side Analysts?

2018 ◽  
Vol 34 (3) ◽  
pp. 455-470
Author(s):  
Grace Il Joo Kang ◽  
Yong Keun Yoo ◽  
Seung Min Cha
Keyword(s):  
Stock Market ◽  
Institutional Investors ◽  
Stock Prices ◽  
Earnings Forecasts ◽  
Positive Association ◽  
Individual Investors ◽  
Target Price ◽  
Stock Trading ◽  
Stock Recommendation ◽  
Korean Stock Market

This paper examines how institutional investors interact with sell-side analysts (hereafter, SSAs) in Korean stock market. In particular, we examine the role of institutional investors as a more sophisticated mechanism which incorporates sell-side analysts’ stock recommendation, target price, and earnings forecast more rapidly than individual investors do. Moreover, we examine whether institutional investors differentiate the quality of sell-side analysts’ information. By using a sample of 1,421 firm-year observations in Korean stock market during 2001–2011, we find that the change of institutional investor’s ownership has a significantly positive association with the level of equity value estimates based on SSAs’ earnings forecasts relative to stock prices and their stock recommendation which are considered as SSAs’ indicator of stock market’s mispricing. In addition, we find that only when SSAs provide more accurate earnings forecasts, institutional investors incorporate SSA’s information into their stock trading. Thus, we conclude that institutional investors in Korean stock market contribute to the enhancement of stock market efficiency by incorporating SSAs’ information into their stock trading more rapidly than individual investors. Our findings add to the literature by shedding a light on the unobserved interaction among more sophisticated stock market participants, such as institutional investors and sell-side analysts.

scholarly journals X-CAPM REVISITED: THE INSTITUTIONAL EXTRAPOLATIVE CAPITAL ASSET PRICING MODEL (I-X-CAPM)

2018 ◽  
Vol 6 (3) ◽  
pp. 1-9
Author(s):  
Semen Son-Turan ◽  
◽  
Erdem Kilic ◽  
Keyword(s):  
Asset Pricing ◽  
Institutional Investors ◽  
Future Price ◽  
Individual Investors ◽  
Pricing Model ◽  
Rational Beliefs ◽  
Future Expectations ◽  
Price Changes ◽  
Asset Pricing Model ◽  
Econometric Tests

This study constructs and tests a consumption-based asset pricing model in which some investors form beliefs about future price changes in the stock market by extrapolating past price changes, while other investors hold fully rational beliefs. The contribution of the present work is the inclusion of institutional investor bias. As such it extends theory. But it also conducts econometric tests by using daily survey data on individual and institutional investors’ sentiment on the current economic situation and their future expectations. Empirical findings may imply that institutions’ sentiment reverts quicker to the equilibrium price than individual sentiment, at least with regard to their beliefs on future economic outlook. If studied further with a bigger dataset, it may imply that institutional investors are closer to the rational-decision making mechanism compared to individual investors. The theoretical framework rests on prospect theory. The market studied is the US equity market, however findings and suggestions can be applied to global markets and various financial instruments.

scholarly journals The Usefulness of Analysts’ Target Prices to Foreign Institutional Investors: U.S. Evidence

2020 ◽  
Vol 14 (5) ◽  
pp. 42-64
Author(s):  
Ahmed Al-Dmour ◽  
Hala Zaidan ◽  
Abdulrahman Alnatour
Keyword(s):  
Stock Returns ◽  
Institutional Investors ◽  
Small Firms ◽  
Earnings Forecasts ◽  
The United States ◽  
Fixed Effect ◽  
Institutional Trading ◽  
Target Price ◽  
Effect Regression ◽  
Foreign Institutional Investors

This paper investigates whether foreign institutional investors in the United States earn future returns by responding to analysts target price revisions. to examine this issue, this study is using firm fixed effect and industry fixed effect regression in order to examine the effect of using analyst’s target price revisions on future abnormal return for foreign institutional investors. We used 51,427 firm-quarter observations between 2003 and 2013 in the U.S. equity market. Different robust approaches were used to proxy foreign institutional trading. We find a positive and significant increase in foreign institutional ownership in response to a positive change in analysts’ target prices, which predict positive stock returns. The results are robust to controlling for other analysts’ outputs, such as revisions to their earnings’ forecasts and stock recommendations, in addition to other determinants of institutional trading. These results are also robust using different measures of institutional trading. In addition, the results show that foreign institutional trading based on target prices’ revisions is more pronounced in firms with high information asymmetry. The results show that foreign institutional investors rely more on analysts in small firms and firms with low analyst coverage.

Limit theorems and price changes in financial markets

1998 ◽  
Vol 77 (5) ◽  
pp. 1353-1356
Author(s):  
Rosario N. Mantegna, H. Eugene Stanley
Keyword(s):  
Financial Markets ◽  
Limit Theorems ◽  
Price Changes

Institutional Investors on the Securities Market

2003 ◽  
pp. 95-101
Author(s):  
O. Khmyz
Keyword(s):  
Financial Crisis ◽  
Capital Market ◽  
Hedge Funds ◽  
Institutional Investors ◽  
Securities Market ◽  
Main Role ◽  
Investment Funds ◽  
Investment Process ◽  
The Capital Market

Acording to the author's opinion, institutional investors (from many participants of the capital market) play the main role, especially investment funds. They supply to small-sized investors special investment services, which allow them to participate in the investment process. However excessive institutialization and increasing number of hedge-funds may lead to financial crisis.

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