Optimism bias in financial analysts' earnings forecasts: Do commissions sharing agreements reduce conflicts of interest?

Sébastien Galanti and Anne-Gaël Vaubourg ()
Additional contact information
Anne-Gaël Vaubourg: CRIEF [Poitiers] - Centre de recherche sur l'intégration économique et financière - UP - Université de Poitiers = University of Poitiers

Working Papers from HAL

Abstract: Implemented in May 2007, the French rules governing commission-sharing agreements (CSAs) consist of unbundling brokerage and investment research fees. The goal of this paper is to analyze the effect of these rules on analysts' forecasts. Based on a sample of one-year-ahead earnings per share forecasts for 58 French firms during the period from 1999 to 2011, we conduct panel data regressions. We show that the analysts' optimistic bias declined significantly after CSA rules, which suggests that these rules are effective at curbing the conflicts of interest between brokerage activities and financial research. Our results are robust tothe impact of the Global Settlement and the Market Abuse Directive.

Keywords: Financial Analysts; Recommendations; Stock Market (search for similar items in EconPapers)
Date: 2017
Note: View the original document on HAL open archive server: https://hal.science/hal-01724253v1
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://hal.science/hal-01724253v1/document (application/pdf)

Related works:
Journal Article: Optimism bias in financial analysts' earnings forecasts: Do commissions sharing agreements reduce conflicts of interest? (2017)
Working Paper: Optimism bias in financial analysts' earnings forecasts: Do commissions sharing agreements reduce conflicts of interest? (2017)
Working Paper: Optimism bias in financial analysts' earnings forecasts: Do commissions sharing agreements reduce conflicts of interest? (2017)
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:hal:wpaper:hal-01724253

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().