Search results

1 – 2 of 2
Per page
102050
Citations:
Loading...
Article
Publication date: 3 December 2018

Hassanudin Mohd Thas Thaker, Azhar Mohamad, Nazrol Kamil Mustaffa Kamil and Jarita Duasa

This study aims to document the influence of information content and the informativeness of analyst reports towards cumulative abnormal return in the Malaysian market.

404

Abstract

Purpose

This study aims to document the influence of information content and the informativeness of analyst reports towards cumulative abnormal return in the Malaysian market.

Design/methodology/approach

Samples of analyst reports for the period 4th January 2010 until 24th December 2015 were collected from the Bursa Malaysia’s repository system for daily basis information. The study uses market-adjusted method for the calculation of cumulative abnormal return and panel regression to test the research objective. In addition, diagnostic tests, which include the variance inflation factor (VIF), correlation analysis, heteroscedasticity tests, serial auto-correlation and the Hausman test, were also performed to ensure the validity and reliability of the data.

Findings

Result from the unbalanced panel data reveals that not all information contained in the analyst reports is able to detect stock returns movement. Only five variables are shown to have a strong association with the returns, and these are target price, earnings forecast, return on equity, cash flows to price and sales to price ratio. The R-square value has also been shown to be relatively low (0.79 per cent), indicating the low predictive power of information content and the informativeness of the analyst report in explaining stock returns. To support the findings based on the knowledge obtained, a descriptive analysis on whether the analyst reports were able to predict the recommendation accurately was performed. Result from the descriptive analysis shows that only 57 per cent of the recommendations are accurate, evidenced by the differing target price and ending price. This outcome appears to contradict the theory of signalling hypothesis. Hence, it can be concluded that analyst reports have less informational role among investors.

Originality/value

This paper has, thus, provided insight into how information disclosed in the analyst report influence the return of stocks, further extending the limited research on analyst report in the context of the Malaysian markets. The paper has also added to the existing literature by providing several implications to practitioners and researchers alike.

Details

Journal of Financial Reporting and Accounting, vol. 16 no. 4
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 29 January 2020

Hassanudin Mohd Thas Thaker, Azhar Mohamad, Nazrol Kamil Mustaffa Kamil and Jarita Duasa

This paper aims to investigate the value of information content and informativeness of the analyst report for Sharīʿah-compliant shares in Malaysia.

423

Abstract

Purpose

This paper aims to investigate the value of information content and informativeness of the analyst report for Sharīʿah-compliant shares in Malaysia.

Design/methodology/approach

The authors use a sample of 657 daily published analyst reports on Sharīʿah-compliant shares from 2010 to 2015, which were downloaded from Bursa Malaysia’s repository system. The method was quantitative in nature and panel regression analysis was used. Diagnostics tests including the variance inflation factor, correlation analysis, heteroskedasticity test, serial auto-correlation and the Hausman test were performed to ensure validity and reliability of data. The significance of the variables indicated whether the analyst reports contained valuable information on Shariah compliancy.

Findings

Results obtained from the FEM-Robust model revealed that the R2 value was equivalent to 0.79 per cent, suggesting that the power of return explained by the information content and informativeness was less for Sharīʿah-compliant shares. The F-statistics were statistically significant for all models, postulating that the data used were reliable and fit for the purpose of analysis. The findings showed that the information content of target price and earnings forecasts significantly influenced the returns of Sharīʿah-compliant shares. In terms of informativeness, return on equity, sales to price ratio and cash flow to price were associated with the returns of the shares.

Practical implications

The outcome from this finding confirmed that the analyst report retained its position as a good source of reference when making investment decisions. However, the disclosure of information in the form of qualitative information together with fundamental information should be enhanced for Sharīʿah-compliant share so that investors would have adequate information when making an investment decision.

Originality/value

This study will supply more insights into the matter of information content and informativeness of the analyst report in Malaysia by focussing on Sharīʿah-compliant shares, which is practically an underexplored research area in Malaysia.

Details

Journal of Islamic Accounting and Business Research, vol. 11 no. 4
Type: Research Article
ISSN: 1759-0817

Keywords

1 – 2 of 2
Per page
102050