Stock recommendation of an analyst who trades on own account

• 成果类型: Article
• 署名作者: Ozerturk, Saltuk
• 署名单位: Southern Methodist University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• 发表日期: 2007
• 页码: 768-785
• 关键词: information acquisition; moral hazard; sale

摘要

This article analyzes the provision of information acquisition and truthful reporting incentives to a financial analyst who can privately trade on own account. In a binary message and state space, I show that the analyst reward scheme essentially provides him with a portfolio endowment traded in the market. Regardless of the true signal, the analyst issues the report that corresponds to the portfolio endowment with maximum market value, given security prices. The analyst information acquisition incentive is driven only by private portfolio, considerations: he acquires information only if he will be holding a large enough position in the stock he covers.