Evaluation Markers and Mitigators in Analyst Reports and Market Response to Stock Recommendations
Klimczak K.M., Dynel M. (2018). Evaluation Markers and Mitigators in Analyst Reports in Light of Market Response to Stock Recommendations, International Journal of Business Communication, Forthcoming
41 Pages Posted: 28 Aug 2014 Last revised: 17 Jan 2018
Date Written: January 16, 2018
Professionals and individuals who invest in equity markets rely on financial analysts’ recommendations and reports to decide on what to invest in and when to trade. This study examines the role of two groups of communication strategies, evaluation markers and mitigators, in establishing analysts’ credibility. The sample consists of 80 reports written in Polish for companies listed on the Warsaw Stock Exchange in Poland. In this emerging market setting, where credibility is challenged by uncertainty, analysts deploy various strategies depending on the recommendation they make: “buy”, “hold” or “sell” shares. The findings point toward a specific group of mitigators, namely subjectivization, as a means of communicating expert opinion. Regression results reveal that investors’ reaction to the publication of a recommendation to “hold” or “sell” shares, measured based on the changes in share prices, is stronger when subjectivization is used in a report. The findings carry implications for research into analyst behavior and for the development of professional writing skills.
Keywords: Text analysis, Quantitative, Discourse analysis, Pragmatics, Stock market
JEL Classification: M40, G19
Suggested Citation: Suggested Citation