Trade generation, reputation, and sell-side analysts

• 成果类型: Article
• 署名作者: Jackson, AR
• 署名单位: Barclays
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2005.00743.x
• 发表日期: 2005
• 页码: 673-717
• 关键词: EARNINGS FORECASTS; OF-INTEREST; debt; INFORMATION; incentives; decisions; MARKETS; entry

摘要

This paper examines the trade-generation and reputation-building incentives facing sell-side analysts. Using a unique data set I demonstrate that optimistic analysts generate more trade for their brokerage firms, as do high reputation analysts. I also find that accurate analysts generate higher reputations. The analyst therefore faces a conflict between telling the truth to build her reputation versus misleading investors via optimistic forecasts to generate short-term increases in trading commissions. In equilibrium I show forecast optimism can exist, even when investment-banking affiliations are removed. The conclusions may have important policy implications given recent changes in the institutional structure of the brokerage industry.