Information Content of Equity Analyst Reports

This paper investigates the market reaction to the information released in security analyst reports. It shows that the market reacts significantly and positively to changes in recommendation levels, earnings forecasts, and price targets. While changes in price targets and earnings forecasts both provide information to the market, revisions in price targets have a larger and more significant impact than comparable revisions in earnings forecasts. The text of the report is also a significant source of information as it provides the justifications supporting an analyst's summary opinion. When all of this information is considered simultaneously, some of it, notably the earnings forecasts, is subsumed. The results further show that analysts correctly predict price targets slightly over 50% of the time. Finally, the valuation methodology used does not seem to be correlated with either the market's reaction or the analyst's accuracy.

Short Interest and Stock Returns

Using a longer time period and both NYSE-Amex and Nasdaq stocks, this paper examines short interest and stock returns in more detail than any previous study and finds that many documented patterns are not robust. While equally weighted high short interest portfolios generally underperform, value weighted portfolios do not. In addition, there is a negative correlation between market returns and short interest over our whole period. Finally, inferences from short time periods, such as 1988-1994 when the underperformance of high short interest stocks was exceptional or 1995-2002, when high short interest Nasdaq stocks did not underperform, are misleading.

Information Content of Equity Analyst Reports

This paper catalogs the complete text of a large sample of All-American Analyst reports and examines the market reaction to the information released. It shows that the text of the report, which provides the justifications supporting an analyst's summary opinion, provides information beyond that contained in earnings forecasts, recommendation levels, and price targets. Including the strength of the analyst's justifications, reduces, and in some models eliminates, the significance of the information available in earnings forecasts and recommendation revisions. By controlling for the simultaneous release of other information, we show that analyst reports do not merely repeat firm releases of information, but also provide both new information and/or interpretation of previously released information to the market. By examining whether the market's reaction differs by report type (i.e. upgrade, reiteration, or downgrade), we demonstrate that information in a report is most important for downgrades and that target prices and the strength of the justifications are the only elements that matter for reiterations. Finally, we find no correlation between the valuation methodology used by analysts and either the market's reaction to a report's release or the analyst's accuracy. Our adjusted R2 of nearly 26% is three or four times larger than that of other studies using only partial content from analyst reports

Short sales and trade classification algorithms

This paper demonstrates that short sales are often misclassified as buyer-initiated by the Lee–Ready and other commonly used trade classification algorithms. This result is due in part to regulations which require that short sales be executed on an uptick or zero-uptick. In addition, while the literature considers “immediacy premiums” in determining trade direction, it ignores the often larger borrowing premiums that short sellers must pay. Since short sales constitute approximately 30% of all trade volume on U.S. exchanges, these results are important to the empirical market microstructure literature, as well as to measures that rely upon trade classification, such as the probability of informed trading (PIN) metric

Diaspora Investment to Help Achieve the SDGs in Africa: Prospects and Trends

Governments and the private sector have traditionally viewed the diaspora as both ongoing providers of financial capital at the micro level, and, as consumers. While recognition of the diaspora’s role in ‘doing development’ has grown, and the diaspora are increasingly seen as important development stakeholders, they are still not viewed as significant social investors by governments, the private sector, or indeed the diaspora themselves. This represents a missed opportunity for harnessing and seeking to scale up diaspora investments for socio-economic growth, especially given the gap in financing available to deliver the Sustainable Development Goals (SDGs). This chapter offers an overview of diaspora investment types and forms, dividing these into four main types, namely: diaspora philanthropy, diaspora remittances, diaspora direct investment (DDI), and diaspora Portfolio Investment (DPI). It argues that governments, financial institutions, the private sector, and the diaspora themselves should view diaspora investments as part of the development financing mix, especially as part of ‘blended finance’ packages

The Market for Borrowing Corporate Bonds

This paper describes the market for borrowing corporate bonds using a comprehensive data set from a major lender. The cost of borrowing corporate bonds is comparable to the cost of borrowing stock, between 10 and 20 basis points, and both have fallen over time. Factors that influence borrowing costs are loan size, percentage of inventory lent, rating, and borrower identity. There is no evidence that bond short sellers have private information. Bonds with Credit Default Swaps (CDS) contracts are more actively lent than those without. Finally, the 2007 Credit Crunch does not affect average borrowing costs or loan volume, but does increase borrowing cost variance

The Market for Borrowing Corporate Bonds

This paper describes the market for borrowing corporate bonds using a comprehensive dataset from a major lender. The cost of borrowing corporate bonds is comparable to the cost of borrowing stock, between 10 and 20 basis points per year. Factors that increase borrowing costs are loan size, percentage of inventory lent, rating, and borrower identity. Trading strategies based on cost or amount of borrowing do not yield excess returns. Bonds with corresponding CDS contracts are more actively lent than those without. Finally, the 2007 Credit Crunch did not affect average borrowing cost or loan volume, but increased borrowing cost variance.

Shifting from crisis response to resilience-building in the Horn of Africa

In recent years, states in the Horn of Africa region have faced unprecedented humanitarian crises, marked by armed conflict, food insecurity, climate change, the loss of livelihoods, and political instability. While the region is no stranger to crises, recent events have seen these crises spill across borders, creating a complex web of interconnected challenges. Together with the Centre for Pan-African Studies at SOAS, our latest policy brief looks at shifting from crisis response to building resilience as part of our joint Meeting Series – Conflict, Regional Stability, and Humanitarianism in Africa

Early-life viral infection and allergen exposure interact to induce an asthmatic phenotype in mice

<p>Abstract</p> <p>Background</p> <p>Early-life respiratory viral infections, notably with respiratory syncytial virus (RSV), increase the risk of subsequent development of childhood asthma. The purpose of this study was to assess whether early-life infection with a species-specific model of RSV and subsequent allergen exposure predisposed to the development of features of asthma.</p> <p>Methods</p> <p>We employed a unique combination of animal models in which BALB/c mice were neonatally infected with pneumonia virus of mice (PVM, which replicates severe RSV disease in human infants) and following recovery, were intranasally sensitised with ovalbumin. Animals received low-level challenge with aerosolised antigen for 4 weeks to elicit changes of chronic asthma, followed by a single moderate-level challenge to induce an exacerbation of inflammation. We then assessed airway inflammation, epithelial changes characteristic of remodelling, airway hyperresponsiveness (AHR) and host immunological responses.</p> <p>Results</p> <p>Allergic airway inflammation, including recruitment of eosinophils, was prominent only in animals that had recovered from neonatal infection with PVM and then been sensitised and chronically challenged with antigen. Furthermore, only these mice exhibited an augmented Th2-biased immune response, including elevated serum levels of anti-ovalbumin IgE and IgG₁as well as increased relative expression of Th2-associated cytokines IL-4, IL-5 and IL-13. By comparison, development of AHR and mucous cell change were associated with recovery from PVM infection, regardless of subsequent allergen challenge. Increased expression of IL-25, which could contribute to induction of a Th2 response, was demonstrable in the lung following PVM infection. Signalling via the IL-4 receptor α chain was crucial to the development of allergic inflammation, mucous cell change and AHR, because all of these were absent in receptor-deficient mice. In contrast, changes of remodelling were evident in mice that received chronic allergen challenge, regardless of neonatal PVM infection, and were not dependent on signalling via the IL-4 receptor.</p> <p>Conclusion</p> <p>In this mouse model, interaction between early-life viral infection and allergen sensitisation/challenge is essential for development of the characteristic features of childhood asthma, including allergic inflammation and a Th2-biased immune response.</p

Nietzsche or Aristotle: The implications for social psychology

YesIn this article, I argue that there is a divide in social psychology between a mainstream paradigm for investigating the flow of power in a largely competitive social life (such as social cognition, social identity theory, and discourse analysis) and a fringe paradigm for investigating the experience of flourishing in conditions of social learning (such as ‘the community of practice metaphor’, ‘dialogical theory’, ‘phenomenological analysis’). Assumptions of power and flourishing demand different conceptions of the self and the social world (e.g. a strategic subject or motivated tactician in a social group versus a reflective learner/artist in a community of practice). The first goal of this article is to reveal the assumptions that lead to this new classification. The second goal is to draw dotted lines to the blind-spots within these paradigms that each reveals. These blind spots are: 1) internal goods could be useful to consider for the power paradigm and external goods for the flourishing paradigm; 2) communicative rationality is underplayed within the power paradigm; while instrumental rationality is underplayed for the flourishing paradigm; 3) judgements and skill are underplayed in the power paradigm; self-interested motivations are underplayed in the flourishing paradigm