Braveheart: On the Divergence of Recommendations Between Normal and Star Analysts

Abstract

This paper examines how conflicting recommendations from star analysts and normal analysts predict a firm's future stock price and operating performance. We find that when normal analysts issue bold negative recommendations that contradict the views of star analysts, firms that receive such negative recommendations experience worse stock returns and deteriorating fundamental performance over the following two years. Our study provides new insights into the disclosure of private information by financial analysts.