Market reaction towards analysts’ recommendation: Evidence from Bursa Malaysia

Abstract

This study investigates the market reactions to analysts’ recommendation revisions within Bursa Malaysia, focusing on the influence of upgrades and downgrades. By analysing stock price behaviour surrounding 1,048 recommendations, including 595 upgrades and 453 downgrades, from January 2010 to June 2018, the research highlights significant asymmetric reactions. Upgrades are followed by moderate positive returns, while downgrades elicit sharper and more immediate negative responses, reflecting investor loss aversion. The results underscore the dual role of analysts in reducing information asymmetry and shaping market dynamics, offering critical insights for investors and policymakers. These findings contribute to understanding market behaviour in emerging markets and highlight the behavioural biases that influence investor decision-making.