Conflicts of Interest in Sell-Side Research and the Moderating Role of Institutional Investors

@article{Ljungqvist2005ConflictsOI,
  title={Conflicts of Interest in Sell-Side Research and the Moderating Role of Institutional Investors},
  author={Alexander Ljungqvist and Felicia C. Marston and Hongjun Yan and Laura T. Starks and Kelsey D. Wei},
  journal={Mutual Funds},
  year={2005}
}
Because sell-side analysts are dependent on institutional investors for performance ratings and trading commissions, we argue that analysts are less likely to succumb to investment banking or brokerage pressure in stocks highly visible to institutional investors. Examining a comprehensive sample of analyst recommendations over the 1994-2000 period, we find that analysts’ recommendations relative to consensus are positively associated with investment banking relationships and brokerage pressure… 

Sell-Side Analyst Research and Reported Conflicts of Interest

Using a unique dataset of conflicts of interest reported by a large investment bank, we examine the relationship between conflicts of interests and sell-side analysts’ behavior in setting target

Strategic distortions in analyst forecasts in the presence of short-term institutional investors

We document that analysts cater to short-term investors by issuing optimistic target prices. Catering dominates among analysts at brokers without an investment banking arm as they face lower

When Do Sell‐Side Analyst Reports Really Matter? Shareholder Protection, Institutional Investors and the Informativeness of Equity Research

We examine whether the informativeness of sell‐side analyst reports depends on the strength of the regulatory environment of a country and the regulatory background of the institutional investors of

Sell‐Side Analyst Research and Reported Conflicts of Interest

Using a unique dataset of conflicts of interest reported by a large investment bank, we examine the relationship between conflicts of interests and sell-side analysts’ behavior in setting target

Monitors or Predators: The Influence of Institutional Investors on Sell-side Analysts

ABSTRACT: Regulators and the investment community have been concerned that institutional investors pressure financial analysts through trading commission fees to issue optimistic opinions in support

Hedge Funds and Analyst Conflicts of Interests

Are sell-side analysts reluctant to go against the investment views of their hedge fund clients? We show that analysts tend to upgrade stocks recently bought and downgrade stocks recently sold by

When do sell-side analyst reports really matter? Shareholder protection, institutional investors and the importance of equity research

We examine whether the informational content of sell-side analyst reports depends on the strength of a countries’ investor protection and the importance of institutional investors at the individual

When Do Sell-Side Analyst Reports Really Matter? Shareholder Protection, Institutional Investors and the Informativeness of Equity Research

We examine whether the informativeness of sell-side analyst reports depends on the strength of the regulatory environment of a country and the regulatory background of the institutional investors of

Hedge funds and their prime broker analysts

Institutional Investor Horizons, Information Environment, and Financing

We provide evidence that investment horizons of institutional shareholders affect firms’ financing decisions. We find that more short-term institutional ownership increases the likelihood of equity
...

References

SHOWING 1-10 OF 68 REFERENCES

Trade Generation, Reputation and Sell-Side Analysts

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

Conflict of interest and the credibility of underwriter analyst recommendations

Brokerage analysts frequently comment on and sometimes recommend companies that their firms have recently taken public. We show that stocks that underwriter analysts recommend perform more poorly

Are Investors Naive About Incentives?

Traditional economic analysis of markets with asymmetric information assumes that uninformed agents account for the incentives of informed agents to distort information. We analyze whether investors

Reputation and Performance Among Security Analysts

Members of the Institutional Investor All-American Research Team supply more accurate earnings forecasts than other analysts when forecasts are matched.by the corporation followed and by the date of

Active Institutional Shareholders and Costs of Monitoring: Evidence from Executive Compensation

Although evidence suggests that institutional investors play a role in monitoring management, not all institutions are equally willing or able to serve this function. We present a stylized model that

Which Institutional Investors Monitor? Evidence from Acquisition Activity

This paper shows that the presence of large public pension fund shareholders particularly reduces acquisitions by cash-rich and low-q firms, and by firms seeking to ``buy growth'', after controlling

Which Types of Analyst Firms Make More Optimistic Forecasts?

Research optimism among securities analysts has been attributed to incentives provided by underwriting activities. We examine how analysts' forecast optimism varies with the business activities used

Institutional Investors and Executive Compensation

We find that institutional ownership concentration is positively related to the pay-for-performance sensitivity of executive compensation and negatively related to the level of compensation, even

Capital Markets Research in Accounting

...