The influence of buy-side analysts on mutual fund trading

Stefan Frey and Patrick Herbst

No 10-10, CFR Working Papers from University of Cologne, Centre for Financial Research (CFR)

Abstract: We present evidence of the impact of buy-side analysts on the behavior and performance of fund managers. Using data provided by a large global asset manager, we relate buy-side analysts' recommendations to fund transactions on a daily basis. Our results show that buy-side analysts have a significant influence on trading decisions: Fund managers almost certainly follow recent recommendation revisions in their trades. Fund flows and sell-side recommendations matter as well, but to a lesser extent. Positive abnormal returns to buy-side analysts' revisions are also reflected in the performance of mutual fund trades: trades triggered by buy-side recommendations have higher returns than other trades.

Keywords: buy-side analysts; analyst recommendations; mutual funds; investment decisions; investment performance (search for similar items in EconPapers)
JEL-codes: G11 G23 G29 M41 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-cfn, nep-fmk and nep-mst
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfrwps:1010

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