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Security analysts as frame-makers


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  • Daniel Beunza Ibáñez
  • Raghu Garud


In this paper we explore the mechanisms that allow securities analysts to value companies in contexts of Knightian uncertainty, that is, in the face of information that is unclear, subject to unforeseeable contingencies or to multiple interpretations. We address this question with a grounded-theory analysis of the reports written on by securities analyst Henry Blodget and rival analysts during the years 1998-2000. Our core finding is that analysts' reports are structured by internally consistent associations that include categorizations, key metrics and analogies. We refer to these representations as calculative frames, and propose that analysts function as frame-makers - that is, as specialized intermediaries that help investors value uncertain stocks. We conclude by considering the implications of frame-making for the rise of new industry categories, analysts' accuracy, and the regulatory debate on analysts'independence.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 733.

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Date of creation: Jan 2004
Date of revision: Sep 2005
Handle: RePEc:upf:upfgen:733

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Keywords: Securities analysts; calculative frames; economic sociolgy;

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  1. Arthur T. Denzau & Douglass C. North, 1993. "Shared Mental Models: Ideologies and Institutions," Economic History, EconWPA 9309003, EconWPA.
  2. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May.
  3. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 100(5), pages 992-1026, October.
  4. Daniel Beunza & David Stark, 2004. "Tools of the trade: the socio-technology of arbitrage in a Wall Street trading room," Industrial and Corporate Change, Oxford University Press, vol. 13(2), pages 369-400, April.
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Cited by:
  1. Jean-Pascal Gond, 2006. "Construire la relation (positive) entre performance sociétale et financière sur le marché de l'ISR : de la performation à l’autoréalisation ?," Revue d'Économie Financière, Programme National Persée, Programme National Persée, vol. 85(4), pages 63-79.
  2. Beckert, Jens, 2011. "Where do prices come from? Sociological approaches to price formation," MPIfG Discussion Paper 11/3, Max Planck Institute for the Study of Societies.
  3. Isabelle Chambost, 2008. "La formation du jugement de l'analyste financier sell-side: La difficile réconciliation de la valeur fondamentale des titres avec leur valeur de marché," Post-Print halshs-00522456, HAL.


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