Does Reciprocity Affect Analysts’ Incentives to Release Timely Information? Evidence from Syndication Relationships in Securities Underwriting

Connie X. Mao () and Wei-Ling Song ()
Additional contact information
Connie X. Mao: Department of Finance, Temple University, Philadelphia, Pennsylvania 19122;
Wei-Ling Song: Department of Finance, Louisiana State University, Baton Rouge, Louisiana 70803

Management Science, 2021, vol. 67, issue 1, 617-639

Abstract: Reciprocity is a subtle but influential factor in maintaining business relationships. We examine the stock recommendations, earnings forecasts, and target prices issued by “reciprocity-pressured” analysts affiliated with securities underwriters who rely on other major underwriters’ invitations to be in syndicates. Consistent with the reciprocal pressure hypothesis, we find that reciprocity-pressured analysts delay releasing negative information on other major underwriters’ clients despite the fact that these analysts’ affiliated underwriters do not receive fees from those clients. We also document temporary retaliation by major underwriters when reciprocity-pressured analysts deviate from such expected reciprocity. The results suggest that reciprocal pressure in the investment banking industry has a real effect on analyst information dissemination.

Keywords: reciprocity; securities class action lawsuits; securities analysts; conflicts of interest; syndicate network (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1287/mnsc.2019.3435 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:67:y:2021:i:1:p:617-639

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().