Dirk Gerritsen

The Impact of Analyst Recommendations and Revisions on the Prices of JSE-Listed Companies

ABSTRACT This study establishes that equity analyst recommendations have a significant short-term impact on share prices, by utilising an international database containing 31 363 analyst recommendations on JSE-listed and delisted companies, published over the period 1995 to 2011. In addition, two portfolio strategies were constructed. The first strategy shows that only investing in stocks with the most favourable consensus recommendations is associated with significant abnormal returns. The second strategy demonstrates that a portfolio consisting of recently upgraded stocks earns positive abnormal returns while a portfolio consisting of downgraded stocks is associated with negative abnormal returns.

Bank switching and deposit rates: Evidence for crisis and non-crisis years

Using a sample of annual deposit data in the Netherlands for the 2004 – 2014 period, we study the fraction of deposits transferred per year by 718 individuals. Controlling for demographic factors, we find that deposit rate differences across banks significantly explain the extent to which depositors reallocate their savings. This effect is predominantly present in non-crisis years, while depositors seemingly exhibited flight-to-safety behavior during the financial crisis. As this behavior holds for fully insured household deposits as well, we conclude that the effect of deposit insurance was muted during the past financial crisis.

Security Analyst Target Prices as Reference Point and Takeover Completion

Based on prospect theory, we posit that security analysts’ target prices function as a reference point for takeover bids and affect deal completion. Using a sample of US takeovers from 1999 to 2014, we find a negative relation between target prices for a takeover target and the chances for successful deal completion. High degrees of target price dispersion indicate high reference points for some investors. Accordingly, we find low completion rates when target price dispersion is high. Our results hold for both ultimate deal completion and implied completion probability measured shortly after bids were announced as an alternative measure for completion likelihood.

Competing for savings : how important is creditworthiness during the crisis?

Interest rates on savings products vary not only across banks, but also across the accounts of individual banks. Building on a unique dataset covering the 2003-2014 period, our results show that time deposit rates reflect more closely the economic environment than bank interest rates on savings accounts do. At bank level, interest rates are significantly negatively related to creditworthiness, especially since the onset of the global financial crisis. With regard to account-specific features, we find that maturity-increasing conditions (i.e., withdrawal fees for savings accounts and product maturity for time deposits) positively influence a products interest rate.