Theses and Dissertations

Issuing Body

Mississippi State University


Highfield, Michael

Committee Member

White, Larry

Committee Member

Campbell, Randall

Committee Member

Yoder, Timothy

Committee Member

Duett, Edwin

Date of Degree


Original embargo terms

MSU Only Indefinitely

Document Type

Dissertation - Campus Access Only


Business Administration (Finance)

Degree Name

Doctor of Philosophy


College of Business


Department of Finance and Economics


This study examines the long-run accuracy of analyst recommendations issued at the expiration of the initial public offering (IPO) quiet period and examines the relation between the Global Settlement, NYSE Rule 472, NASD Rule 2711, and analyst recommendations. It is expected that firms which receive positive recommendations will outperform the market and firms with neutral recommendations. In addition, it is expected that banks named in the Global Settlement will become more selective when issuing recommendations. This study examines firms engaging in IPOs from July 9, 2002 through December 31, 2005 and finds that analyst ratings have become more balanced following the Global Settlement, NYSE Rule 472, and NASD Rule 2711. When controlling for firm size, underpricing, rating heterogeneity, and analyst affiliation, firms which receive positive analyst ratings experience greater buy-and-hold abnormal returns than firms which do not. Furthermore, firms which receive multiple “buy” ratings outperform firms which receive only one “buy” rating when controlling for underpricing firm size, and the number of neutral ratings. Banks named in the Global Settlement appear to be more selective when issuing positive recommendations. Firms which receive a positive rating from a bank named in the Global Settlement outperform firms which receive a positive rating from a bank not named in the Global Settlement. Lastly, prior to the Global Settlement, it appears that sanctioned banks issued ratings one level higher than they should have. Firms which received positive ratings experienced neutral performance and firms which received natural ratings experienced negative performance. Since the Global Settlement, sanctioned banks appear to issue accurate ratings since positive ratings are associated with increased buy-and-hold abnormal returns and neutral ratings do not significantly impact firm performance.



Analyst Recommendations||Analyst Ratings||Analyst Bias||Initial Public Offering||Quiet Period