The influence of buy-side analysts on mutual fund trading

Stefan Frey and Patrick Herbst

Journal of Banking & Finance, 2014, vol. 49, issue C, 442-458

Abstract: We present evidence on the trading and performance impact of buy-side analysts. Using data provided by a large global asset manager, we relate buy-side analysts’ recommendations to fund transactions on a daily basis. We show that buy-side analysts significantly influence trading decisions: Fund managers strongly follow recent recommendation revisions, even after controlling for other trading determinants. 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. Overall, the impact of buy-side analysts is more pronounced than that of sell-side analysts.

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: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:49:y:2014:i:c:p:442-458

DOI: 10.1016/j.jbankfin.2014.01.007

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