Analyst Recommendation Bias and Brokerage House Shareholding

Masahito Kato
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Masahito Kato: Graduate School of Economics, Kobe University

No 1635, Discussion Papers from Graduate School of Economics, Kobe University

Abstract: When a brokerage house owns a firm fs stock, a capital relationship is createdbetween the brokerage house and that firm. This paper examines the effect the capital relationship between a brokerage house and a firm has on the content of a recommendation,and the results are as follows. First, the capital relationship between a brokerage house and a firm creates an optimistic bias in recommendations. Second, the stronger the capital relationship between a brokerage house and a firm, the larger the optimistic bias in recommendations.

Keywords: Analyst; Recommendation; Conflicts of interest; Brokerage house; Shareholdings (search for similar items in EconPapers)
JEL-codes: G10 G14 G24 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2016-10
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