Sociopolitical Dynamics in Relations between Top Managers and Security Analysts : Favor Rendering , Reciprocity , and Analyst Stock Recommendations

@inproceedings{Westphal2008SociopoliticalDI,
  title={Sociopolitical Dynamics in Relations between Top Managers and Security Analysts : Favor Rendering , Reciprocity , and Analyst Stock Recommendations},
  author={James D. Westphal and MICHAEL B. CLEMENT},
  year={2008}
}
We examine how the disclosure of negative firm information may prompt top executives to render personal and professional favors for security analysts, who may reciprocate by rating firms relatively positively. We further examine how negative ratings may prompt executive negative reciprocity toward an analyst and how such retaliation may deter other analysts’ negative ratings. Because analyst recommendations influence investor behavior, firm reputation, and access to capital, our theory and… CONTINUE READING
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