Factors Influencing Changes In Analyst Consensus Recommendations: Evidence From The Johannesburg Stock Exchange

Abstract

This paper builds on Prayag and van Rensburg’s (2006) study that recognised the returns that can be generated by acting on changes in consensus recommendations on the Johannesburg Stock Exchange (JSE). It identifies factors that influence analysts to revise their recommendations based on style anomalies, momentum strategies, and market sentiment. Findings indicate that analysts’ recommendations on the JSE are driven by similar factors to those in other major markets with a propensity for favouring high-growth stocks with low value multiples. The results for tests in which variables are lagged for longer periods suggest that historical price changes have a more significant impact on analyst revisions than recent changes.