Rafael Moreira Antônio
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Alex Augusto Timm Rathke
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Marcelo Botelho da Costa Moraes
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Marcelo Augusto Ambrozini
The present study analyses the effect of trade volume on market
analysts’ purchase and sell recommendation choices. The research analyses
7,293 consensus recommendations regarding Brazilian listed companies for the
period 2008-2014. Sample data includes firms’ fundamentalist
characteristics, as total assets, return, net income and dividends, with the
objective to identify the factors taken under account by analysts for their
recommendation evaluations. Applying unbalanced panel data regression
strategy, we find that analysts prefer to recommend shares with higher
observed trading volume, and the shares with more favourable evaluations are
those with higher observed trading volume, which is agreeing with
theoretical expectations. Other significative covariates for recommendations
are the earnings before interests and taxes – EBIT, return per share, return
of assets – ROA, paid dividends, and the price/equity ratio.