Analysts’ information influence on the dynamics of stock prices

Abstract

The interrelationship of ratings provided by analysts and the dynamics of stock prices is analysed in the article. The paper covers how positive and negative evaluations provided by analysts influence the stock rate of a company. Theories elucidating the factors that effect fluctuations of stock prices, systems of analytic ratings of companies, and particularity of their practice are examined in this paper; moreover the methods of stock price evaluation are also compared in the article. The aim of the paper is to establish dependence between information presented by analysts with the stock prices dynamics. The investigation is based on studying historical data of stock prices fluctuation and using statistical data analysis method. After analysis of theoretical and practical aspects of investments in the stock market it is shown that stock prices modify more than ordinarily when analysts provide either positive or negative recommendation, i.e. investors react to the changes of ratings made by analysts.