Investment bank monitoring and bonding of security analysts’ research

Oya Altınkılıç, Vadim S. Balashov and Robert S. Hansen

Journal of Accounting and Economics, 2019, vol. 67, issue 1, 98-119

Abstract: We assess investment banks’ influence over the agreement between their analysts’ research behavior and their clients’ interests, in the post-reform era. Competing banks discipline their analysts with worse career outcomes for producing biased reports, issuing shirking reports, and for involvement in the earnings guidance game, showing meaningful monitoring of their analysts. Highly reputable banks provide more monitoring discipline of their analysts and bonding of their moral hazard than other banks. The findings agree with the banks taking responsibility for aligning analysts’ behavior with clients’ interests.

Keywords: Analysts; Analysts’ forecasts; Analysts’ recommendations; Career outcome; Earnings guidance; Financial analysts; Financial markets; Herding; Investment banking; Management forecasts; Management guidance; Market efficiency; Piggybacking; Regulatory change; Security analysts; Shirking (search for similar items in EconPapers)
JEL-codes: D82 G2 G24 G29 M41 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:67:y:2019:i:1:p:98-119

DOI: 10.1016/j.jacceco.2018.08.016

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