The role of the business press in the pricing of analysts’ recommendation revisions
Minkwan Ahn& Michael Drake & Hangsoo Kyung & Han Stice
Review of Accounting Studies
Abstract
We investigate the information-dissemination role of the business press by examining
the coverage of analyst recommendation revisions. Consistent with the press providing
wider dissemination of analyst reports, we find evidence that coverage of analyst
recommendation revisions significantly increases the initial market reaction to these
revisions and decreases the subsequent price drift. Furthermore, we find that news flash
coverage, rather than in-depth coverage, of a recommendation revision drives both the
initial market reaction results and drift results. Finally, we show that broader press
coverage influences the activities of large-trade institutional investors but not highfrequency
traders. Overall, our findings suggest a complementary role between analysts
and the business press: increased dissemination of recommendation revisions, rather
than information creation on the part of the business press, serves to better inform the
market about analyst recommendation revision decisions.