Do security analysts exhibit persistent differences in stock picking ability?

Michael B. Mikhail, Beverly R. Walther, Richard H. Willis*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

142 Scopus citations


We investigate whether security analysts exhibit persistence in their stock picking ability. We find that analysts whose recommendation revisions earned the most (least) excess returns in the past continue to outperform (underperform) in the future. Further, the market recognizes these performance differences in the five-day period surrounding the recommendation revision. This market reaction, however, is incomplete. Excess returns in the one and three trading months following the revision are significant and positively associated with analysts' prior performance. However, a trading strategy taking long (short) positions in recommendation upgrades (downgrades) conditional on analysts' prior performance is unprofitable.

Original languageEnglish (US)
Pages (from-to)67-91
Number of pages25
JournalJournal of Financial Economics
Issue number1
StatePublished - Oct 2004


  • Persistence
  • Security analysts
  • Stock recommendations
  • Trading strategy

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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