The greater the volume, the greater the analyst

Egle Karmaziene

Finance Research Letters, 2023, vol. 51, issue C

Abstract: Are sell-side security analysts paid for turnover-generating research? Using hand-collected annual income data from tax records in Sweden for the 1997-2007-year period, I show that analysts’ compensations increase in the trading turnover that their recommendations generate. Analysts are paid 0.002 % of broker-trading volume, or approximately 1 % of broker’s commission revenues. The findings empirically validate the previously assumed turnover-compensation link and estimate its magnitude. The results may have policy implications related to the Markets in Financial Instruments Directive.

Keywords: Compensation; Analyst; Turnover; Stock recommendation; Broker (search for similar items in EconPapers)
JEL-codes: G12 G24 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322005542

DOI: 10.1016/j.frl.2022.103377

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