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The Impact Of Nasd Rule 2711 And Nyse Rule 472 On Analyst Behavior: The Strategic Timing Of Recommendations Issued On Weekends, Yi Dong, Nan Hu

Research Collection School Of Computing and Information Systems

Amendments to NASD Rule 2711 and NYSE Rule 472, enacted in May 2002, mandate that sell-side analysts disclose the distribution of their security recommendations by buy, hold and sell category. This regulation enhances the transparency of analysts' information and mitigates the long-recognized optimistic bias in their recommendations. However, we find that analysts are more likely to issue sell recommendations or downgrade revisions on weekends when investors have limited attention after these rule changes. This pattern is more pronounced for prestigious analysts, who are more likely to influence stock prices. Market reaction tests reveal an incomplete immediate response and a greater …