AN ANALYSIS OF THE INFORMATION CONTENT OF STOCK RECOMMENDATIONS IN S-REITS

Abstract

This dissertation seeks to study the information content of analyst coverage in S-REITs. With the success of S-REITs in Singapore and Singapore’s ambition to be established as a leading wealth management hub, increased analyst attention will be drawn to the S-REITs sector due to increased activity. Thus, it is critical to examine whether stock analysts are able to provide valuable information regarding the performance of a particular S-REIT stock. Using a sample of S-REITs, difference in means is computed to measure the extent to which recommendation consensus gathered from the I/B/E/S platform is reflective of REIT stock performance. A multi-variate regression is subsequently carried out. The empirical results show that stock recommendations contain information content that can significantly differentiate between REIT performance, and to some extent predict future performance. However, the opposite is found for recommendation consensus during crisis periods.