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|Title: ||Conflicts of Interest in Sell-side Research and The Moderating Role of
|Authors: ||Ljungqvist, Alexander|
Starks, Laura T.
Wei, Kelsey D.
|Issue Date: ||18-Jan-2005 |
|Series/Report no.: ||FIN-04-034|
|Abstract: ||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, but negatively associated with the
presence of institutional investor owners. The presence of institutional
investors is also associated with more accurate earnings forecasts and
more timely re-ratings following severe share price falls.|
|Appears in Collections:||Finance Working Papers|
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