Independent and Affiliated Analysts: Disciplining and Herding

• 成果类型: Article
• 署名作者: Xue, Hao
• 署名单位: New York University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51631
• 发表日期: 2017
• 页码: 243-267
• 关键词: EARNINGS FORECASTS; information acquisition; Investment banks; BEHAVIOR; recommendations; COMMUNICATION; reputation; cascades; MODEL

摘要

The paper investigates strategic interactions between an independent analyst and an affiliated analyst in the context of issuing stock recommendations. Compared to the independent analyst, the affiliated analyst has superior information, but faces a conflict of interest. I show that the independent analyst disciplines the affiliated analyst's biased forecasting behavior. Meanwhile, the independent analyst sometimes herds with the affiliated analyst to improve his recommendation accuracy. Because of the affiliated analyst's conflict of interest, the value the independent analyst expects to derive from his ex post herding option is endogenous and can motivate him to acquire more information up front. As a result, herding and disciplining not only coexist, but also mutually reinforce each other. That is, there is an endogenous complementarity between the independent analyst's ex ante disciplining role and his ex post herding behavior in equilibrium.