Conflict of Interest and the Credibility of Underwriter Analyst Recommendations

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ID: 291769
1999
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Abstract
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 than "buy" recommendations by unaffiliated brokers prior to, at the time of, and subsequent to the recommendation date. We conclude that the recommendations by underwriter analysts show significant evidence of bias. We show also that the market does not recognize the full extent of this bias. The results suggest a potential conflict of interest inherent in the different functions that investment bankers perform.
Reference Key
openalex_W2100876305 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Roni Michaely, Kent L. Womack
Journal review of financial studies
Year 1999
DOI
10.1093/rfs/12.4.653
URL
https://doi.org/10.1093/rfs/12.4.653
Keywords Keywords not found

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