Hedge Fund Activism And Analyst Uncertainty

Authors

Ryan Flugum, University of Northern IowaFollow
John S. Howe, Trulaske College of Business

Document Type

Article

Keywords

Analyst forecasts, Analyst recommendations, Hedge fund activism

Journal/Book/Conference Title

International Review of Economics and Finance

Volume

66

First Page

206

Last Page

227

Abstract

Using a sample of hedge fund activist events from 2001 to 2014, we assess analysts’ reaction to hedge fund activism by considering changes in their recommendations and their earnings forecast accuracy. Following the arrival of a hedge fund activist, a preponderance of recommendations move to or are reinstated at the Hold level, the accuracy of analyst earnings forecasts decreases, and there is a decline in analyst forecast activity. Overall, our findings suggest hedge fund activism increases analyst uncertainty, limiting their ability to add value in this setting.

Department

Department of Finance

Original Publication Date

3-1-2020

DOI of published version

10.1016/j.iref.2019.11.022

Repository

UNI ScholarWorks, Rod Library, University of Northern Iowa

Language

en

Recommended Citation

Flugum, Ryan and Howe, John S., "Hedge Fund Activism And Analyst Uncertainty" (2020). Faculty Publications. 343.
https://scholarworks.uni.edu/facpub/343