Who Are the Best? Local Versus Foreign Analysts on Latin American Stock Markets

Abstract

This paper investigates the relative performance of local and foreign financial analysts on Latin American emerging markets. There is a strong evidence that foreign financial analysts outperform local analysts on these markets. Foreign analysts produce more timely and more accurate forecasts. A significant price reaction is observed following their downward forecast revisions. Therefore foreign investors do not necessarily need to open relations with local financial analysts when they want to trade on these markets. The results are consistent with previous evidence that documents a better information and greater sophistication on the part of foreign investors on overseas markets.