Are European financial analyst rankings informative for investors?

Summary Can the investor rely on the results of annual sell-side analyst rankings to identify the best performing analysts? This is the question that this thesis attempts to answer through two empirical studies. The first study investigates the factors that explain the election of an analyst in a ranking: his or her performance on forecasts and recommendations relative to other analysts in the sector, the size of the financial intermediary to which he or she belongs, and his or her experience in the sector. The second explores the predictive nature of the analyst's ranking on the performance of his recommendations in the year following his ranking. The performance of several families of stock portfolios recommended by ranked analysts on the one hand and unranked analysts on the other hand are then compared. The two empirical studies show that there is almost no relationship between the analyst's ranking and his quantitative performance. These results raise the specific question of the impact of the analyst's affiliation on his or her ranking. Moreover, they call into question the use of analyst rankings in the Anglo-Saxon literature as a proxy for reputation.