TABLE OF CONTENTS In this paper we examine the relation between analyst expertise and performance utilizing the stocks recommended by investment professionals featured in the WSJ "Dartboard" column. As documented in prior studies, we find that experts are better informed about a stock's intrinsic value. Moreover, we confirm a direct relationship between investment performance and expertise. Stocks recommended by CFA charterholders and non-CFA charterholders from New York City and California yield statistically significant higher abnormal daily returns.
Keywords: CFA charterholder; geographical location; analyst performance; WSJ "Dartboard" column.
In this study, we examine the relation between analyst expertise and performance utilizing the stock recommendations published in the Wall Street Journal (WSJ) "Dartboard" column. We find that stocks recommended by the financial experts featured in the Dartboard column produced a statistically significant 4.0% abnormal return over the six-month contest period. The likelihood that stocks recommended by experts does better than the market only by chance can be rejected at reasonable levels of confidence. Moreover, we confirm a direct relationship between investment performance and expertise. Stocks recommended by Chartered Financial Analyst (CFA) charterholders and non-CFA charterholders from New York City and California yield statistically significant abnormal returns.
Security analysts play a pivotal role in financial markets. Their information collection, assimilation, and dissemination activities affect investor awareness and knowledge about specific companies. Consequently, to the extent investors trade in securities they are familiar with and educated...
