Sell-side equity analysts and equity sales: a study of interaction

Kenneth Lee and Melina Manochin

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The extensive literature on sell-side analysts makes little reference to equity sales as a significant economic actor in the field. Drawing on a recent field study, our empirical evidence identified equity sales teams within brokers, who promote research to external clients, as a powerful agent cluster in close time-space proximity to analysts. This paper sheds light on analyst-sales interactions, which we contend represent an important field condition. The study employs concepts from strong structuration theory, in particular position-practice relations, to develop a narrative about sell-side analysts’ and sales team positional obligations, privileges, power relations and matters of trust. Our study makes three contributions. Firstly, we identify the symbiosis embedded in the relationship between sales and research - analysts need equity sales to market their product, to positively influence client perceptions of analysts and to provide access to prized fund managers. In turn, sales need analysts to provide content for them to market. Secondly, integral to sales-analyst interactions is the provision of feedback, which causes difficulties in the relationship, leaving analysts vulnerable to sales influence. Thirdly, regulatory tension has changed sales-analyst interactions, and this can enrich our understanding of why analysts continue to publish commoditised research into highly competitive markets.

Keywords: context analysis; equity sales; sell-side analysts; sociology of finance; strong structuration (search for similar items in EconPapers)
JEL-codes: M40 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2021-09-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in British Accounting Review, 1, September, 2021, 53(5). ISSN: 0890-8389

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