The behavior of financial analysts during the Asian financial crisis in Indonesia,Korea, Malaysia,and Thailand |
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| Institution: | 1. College of Business, Florida State University, Tallahassee, FL 32308, USA;2. California State University, Long Beach, CA 90801, USA;1. The Water Institute at the University of North Carolina, Chapel Hill, United States;2. Nairobi City Water and Sewer Company, Ltd., Kenya;3. Department of Environmental Sciences and Engineering, Gillings School of Global Public Health, the University of North Carolina, Chapel Hill, United States;4. School of Earth, Ocean & Environment, University of South Carolina, United States;1. Universitas Muhammadiyah Parepare, Indonesia;2. Welfare Health Care Community, Indonesia;3. Universitas Sulawesi Barat, Indonesia;4. Universitas Hasanuddin, Indonesia;1. Chow Center, WISE, and the School of Economics, Xiamen University, Xiamen 361005, China;2. Department of Economics, Korea University, Seoul 02841, South Korea;1. CEPII, 113 rue de Grenelle, 75007 Paris, France;2. UMR Economie Publique, INRA and AgroParisTech, Paris, France;3. OECD, Paris, France;1. Department of Surgery, University of Washington, 1959 NE Pacific St., Seattle, WA, 98195, USA;2. Department of Pediatrics, University of Washington, Seattle Children''s Hospital, Seattle, WA, USA;3. Department of Medicine, University of Washington, Seattle, WA, USA;4. Hospital Quality and Patient Safety, Harborview Medical Center, Seattle, WA, USA;5. Department of Anesthesiology, Virginia Commonwealth University Health System, Richmond, VA, USA;6. Graduate Medical Education, University of Washington, Seattle, WA, USA;7. Department of Urology, Seattle Children''s Hospital, Seattle, WA, USA;8. Department of Health Services, University of Washington Medical Center, Seattle, WA, USA;9. Department of Biomedical Informatics and Medical Education, University of Washington Medical Center, Seattle, WA, USA |
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| Abstract: | This study investigates the behavior of a potentially influential class of market participants, the stock analysts, around the period of market crashes in four Asian countries. We find that analysts not only failed to anticipate the weaknesses in the firms they covered before the crash, they also failed to sufficiently adjust their forecasts after these markets crashed. Throughout the entire period of the study, the magnitudes of forecast errors were several times to that observed in the pre-crash period. However, we also do not find evidence of panic or herding on a large scale. Other issues investigated in this paper include the changes in coverage, changes in forecasts accuracy, the extent analysts agree and the patterns of their convergence for the sample. We also compare analyst forecasts for large versus small firms, and for high- versus low-growth/quality firms. A contribution to the literature is the cataloguing of models that may provide explanations for investors' expectations during a market crash. |
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