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Sell-Side School Ties

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  • LAUREN COHEN
  • ANDREA FRAZZINI
  • CHRISTOPHER MALLOY

Abstract

We study the impact of social networks on agents' ability to gather superior information about firms. Exploiting novel data on the educational background of sell-side analysts and senior corporate officers, we find that analysts outperform by up to 6.60% per year on their stock recommendations when they have an educational link to the company. Pre-Reg FD, this school-tie return premium is 9.36% per year, while post-Reg FD it is nearly zero. In contrast, in an environment that did not change selective disclosure regulation (the U.K.), the school-tie premium is large and significant over the entire sample period. Copyright (c) 2010 the American Finance Association.

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Bibliographic Info

Article provided by American Finance Association in its journal The Journal of Finance.

Volume (Year): 65 (2010)
Issue (Month): 4 (08)
Pages: 1409-1437

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Handle: RePEc:bla:jfinan:v:65:y:2010:i:4:p:1409-1437

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