The School of Business and Economics is proud to announce that assistant professor of finance, Maria Schutte, has been awarded the 2009 Graham and Dodd Scroll Award for an article she coauthored with Emre Unlu, assistant professor at the University of Nebraska-Lincoln.
In the article “Do Security Analysts Reduce Noise?,” Schutte and Unlu hypothesize that security analysts fulfill an important market function by helping investors differentiate between information related to firm fundamentals and outdated or false information. As a result, the noise component of stock return volatility declines significantly during the first year a stock is followed by analysts. In addition, the authors find that the noise reduction in stocks is related to the number of analysts assigned to follow the stock during that first year. The larger the number of analysts, the larger the noise decline. According to the CFA Institute website the work by Schutte and Unlu “suggest that analyst coverage makes stock prices less noisy,” and that “Analysts’ noise-reducing ability can have positive consequences for the performance of corporate and portfolio managers who rely on forecasting to make long-term financial decisions.”
“I am honored to receive this award because it is the result of many years of work and study and of a very fruitful coauthoring relation with Emre (Unlu), who is not only a great scholar but also a wonderful friend. Emre and I began work on this project as graduate students at the University of Missouri in 2005, this was our first independent scholarly activity. I am happy that while working on this project I gained a better understanding of how informed agents affect price formation and that my colleagues in the profession found this new information useful. This award has special significance to me because it recognizes excellence in financial writing, a skill that I have worked very hard to develop and that I try to cultivate in all my students.”
The Graham and Dodd Award was created in 1960 to honor excellence in research and financial writing and the enduring contributions of Benjamin Graham and David L. Dodd to the investment analysis field. Graham and Dodd wrote Security Analysis in 1934, a hallmark investments text. The award is the Financial Analysts Journal’s (FAJ) highest honor, placing Professor Schutte’s work among the best that has been published by the FAJ over the past year.
The Financial Analysts Journal is published six times yearly by the Chartered Financial Analyst (CFA) Institute, a worldwide association of securities analysts, portfolio managers, strategists, and consultants. The FAJ is aimed at advancing understanding of investment management through the publication of high quality research. Past winners have included Nobel laureate William Sharpe, and Morningstar Inc. VP of quantitative research, Paul Kaplan. The CFA Institute is the global association for investment professionals and has nearly 100,000 members, in 133 countries and territories, as well as 137 affiliated professional societies in 57 countries and territories. More information may be found at www.cfainstitute.org .