The effects of MiFID II on sell-side analysts, buy-side analysts, and firms

• 成果类型: Article
• 署名作者: Fang, Bingxu; Hope, Ole-Kristian; Huang, Zhongwei; Moldovan, Rucsandra
• 署名单位: University of Toronto; BI Norwegian Business School; City St Georges, University of London; Concordia University - Canada
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-020-09545-w
• 发表日期: 2020
• 页码: 855-902
• 关键词: investment bank analysts; CONFLICTS-OF-INTEREST; GLOBAL SETTLEMENT; FORECAST ACCURACY; determinants; performance; COMPETITION; BIAS; disclosure; expertise

摘要

This paper provides early but broad empirical evidence on MiFID II, which requires investment firms to unbundle investment research from other costs they charge to clients. Employing difference-in-differences matched-sample research designs with firm fixed effects, we find a decrease in the number of sell-side analysts covering European firms after MiFID II implementation, particularly for firms that are less important to the sell-side. However, research quality improves; specifically, individual analyst forecasts are more accurate and stock recommendations garner greater market reactions. In addition, sell-side analysts seem to cater more to the buy-side after MiFID II by providing industry recommendations along with stock recommendations. Importantly, we predict and find evidence that buy-side investment firms turn to more in-house research after MiFID II implementation. Equally interesting, buy-side analysts increase their participation and engagement in earnings conference calls, compared to the control group. We find some evidence that stock-market liquidity decreases post MiFID II.