The Effectiveness of Reputation as a Disciplinary Mechanism in Sell-Side Research

• 成果类型: Article
• 署名作者: Fang, Lily; Yasuda, Ayako
• 署名单位: INSEAD Business School; University of Pennsylvania
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhn116
• 发表日期: 2009
• 页码: 3735
• 关键词: CONFLICTS-OF-INTEREST; INVESTMENT BANK REPUTATION; EARNINGS FORECASTS; BIASED EARNINGS; career concerns; analysts; performance; INFORMATION; accuracy; MARKETS

摘要

We examine whether the quality differentials in earnings forecasts between reputable and nonreputable analysts vary with the severity of conflicts of interest. We measure personal reputation using the Institutional Investor All-American (AA) awards, and bank reputation using Carter-Manaster ranks. While both personal and bank reputation are associated with higher quality forecasts overall, their effectiveness against conflicts of interest differs. The severity of conflicts has a negative and significant effect on the performance of non-AAs at top-tier banks relative to other analysts, while it has a positive and significant effect on the performance of AAs at top-tier banks relative to others. Thus personal reputation is an effective disciplinary device against conflicts of interest, while bank reputation alone is not.