The Economics of Conflicts of Interest in Financial Institutions

  title={The Economics of Conflicts of Interest in Financial Institutions},
  author={Hamid Mehran and Ren{\'e} Stulz},
  journal={S\&P Global Market Intelligence Research Paper Series},
A conflict of interest exists when a party to a transaction could potentially make a gain from taking actions that are detrimental to the other party in the transaction. This paper examines the economics of conflicts of interest in financial institutions and reviews the growing empirical literature (mostly focused on analysts) on the economic implications of these conflicts. Economic analysis shows that, although conflicts of interest are omnipresent when contracting is costly and parties are… 

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