Financial Analysts and Information Processing on Financial Markets

Financial analysts play an ambivalent role on financial markets: On the one hand investors and the media frequently follow their advice, on the other hand they are regularly discredited when their forecasts or recommendations prove to be erroneous.§This cumulative thesis explores the informational content of financial analysts forecasts for investors by addressing three specific topics: Consensus size as a rudimentary investment signal, the association of analysts target prices with business sentiment, and the consistency of analysts different investment signals in the context of the 2008 financial crisis. Overall, the thesis provides additional evidence that investors can profit from analysts forecasts and recommendations. However, it is also shown that investors need to be very selective about which signal to rely on and in which context to use these because analysts investment signals can also be heavily biased and erroneous.§About the author: Jan-Philipp Matthewes studied Economics at the University of Cologne, Germany, and holds a Dean s Award from the Faculty of Economics and Social Sciences. His research focus on financial analysts evolved while working in equity research at a leading German bank. The PhD-thesis was supervised by Prof. Dr. Martin Wallmeier, Finance and Accounting, at the University of Fribourg, Switzerland. Since 2013 Jan-Philipp Matthewes is the managing director of the boutique private equity firm Matthewes Capital Invest GmbH .