A Research About The Effectiveness Of China’s Analysts’ Reports

China’s equity market went through a rapid developing period since 1990s and the number of stocks trading in the market increased from few ones to many.In such a developing capital market like China,equity research reports published by analysts are important information resource for investors.Analysts searching the pool of stocks and pick up those ones worth being invested or sold out to form recommendation reports.These recommendation reports are important source of investment decision for both institution and personal investors.Thus the effectiveness of analyst reports is an important indicator to test the effectiveness of stock market.This essay use event study to test the value of these equity research reports in a bull,a bear and a vibrating market.The data we used ranges from 2006 to 2016.We find:standard rating is generally over rated and untrustworthy;standard rating adjustment is of invest value and investors could capture abnormal return by investing according to adjusted standard ratings;stocks recommended by star analysts could not bring more abnormal return than those recommended by non-star analysts.We perform an investment simulation according to our conclusion(lower down positive standard rate if the relating rating adjustment is not positive)and find that star analysts generally have better performance than non-star analysts in grabbing short-term abnormal return.This phenomenon is more significant in vibrating market and in grabbing mid-tem abnormal return.But their reports have no significant difference generally.Thus,investors should focus more on standard rating adjustment instead of over-rated standard rating reports.Besides,while taking investment advice by star analysts,investors should pay more attention to specific investment purpose and market environment.There are three main creational points of this essay:first,it test the effect of analyst reports on stock price;secondly,it test the accuracy of the standard rating and rating adjustment of analyst reports;thirdly,it research the difference between the star analysts and non-analysts’ reports and help investors to form an unbiased attitude towards different types to analysts.