| In the first chapter, Informativeness of Analysts' Recommendations , we investigate the informativeness of sell-side analysts' recommendations by examining abnormal stock returns before, during and after changes in analysts' ratings. First, we show that the market derives different information from the similar recommendations by different brokerage firms, especially in the case of downgrading from “buy”. The brokerage firms in the sample differ in terms of the impact of their analysts' recommendations on subsequent stock returns, although they are all ranked highly. Second, we document that the market reacts quickly to the analysts' recommendations, which contradicts the continuation of abnormal returns for months after recommendations, i.e., the so-called “post-recommendation drift”, documented by the literature.; In the second chapter, A Model of Inside and Outside Experts-the Example of Buy-side and Sell-side Equity Analysts, we model the information transmission from multiple equity analysts to a mutual fund manager. The buy-side analyst has the same preference as the manager while the sell-side has different preference. If the fund manager relies on only sell-side analysts, a subgame equilibrium always exists in which the analysts' opinions are independent of their private signals and thus the information content is totally lost. With one buy-side analyst in the panel, however, truth-telling is the only subgame equilibrium under a certain range of parameters. The equilibrium outcome is that the manager relies on both sell-side and buy-side equity analysts to make investment decisions.; In the third chapter, Evaluating Preschool Programs when Length of Exposure to the Program Varies—A Nonparametric Approach, we develop a nonparametric multi-dimensional matching method and apply this method to a large, non-experimental data set to evaluate the effects of a preschool enrichment program. This generalized version of the matching method is able to control for nonrandom selectivity into the program or into alternative program duration by matching the group of interest to a comparison group on more than one dimension. It minimizes the impact of distributional assumptions. The third chapter is intimately related to the first two in that it develops the nonparametric multi-dimensional matching method which is applicable to a variety issues in corporate finance. |
