Stock Recommendations and Analyst Conflicts of Interest: Evidence from the Taiwan Stock Market

This paper investigates stock price reaction to analysts ’ information reported in a Taiwanese financial newspaper. We found that the longer investment horizons are, the worse stock recommendations perform after the forecast release date. The results also show that the reaction of stock price is asymmetric with respect to industry-specific factors. Additional evidence, using both ratios of forecast error and the change in selling volume, indicates that potential conflict occurs between brokerage firms ’ research departments and dealer departments