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The activities of buy-side analysts and the determinants of their stock recommendations

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Listed:
  • Brown, Lawrence D.
  • Call, Andrew C.
  • Clement, Michael B.
  • Sharp, Nathan Y.

Abstract

We survey 344 buy-side analysts from 181 investment firms and conduct 16 detailed follow-up interviews to gain insights into the activities of buy-side analysts, including the determinants of their compensation, the inputs to their stock recommendations, their beliefs about financial reporting quality, and the role of sell-side analysts in buy-side research. One important finding is that 10-K or 10-Q reports are more useful than quarterly conference calls and management earnings guidance for determining buy-side analysts׳ stock recommendations. Our results also suggest that sell-side analysts add value by providing buy-side analysts with in-depth industry knowledge and access to company management.

Suggested Citation

  • Brown, Lawrence D. & Call, Andrew C. & Clement, Michael B. & Sharp, Nathan Y., 2016. "The activities of buy-side analysts and the determinants of their stock recommendations," Journal of Accounting and Economics, Elsevier, vol. 62(1), pages 139-156.
    • Handle: RePEc:eee:jaecon:v:62:y:2016:i:1:p:139-156
    DOI: 10.1016/j.jacceco.2016.06.002
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    More about this item

    Keywords

    Buy-side analysts; Stock recommendations; Compensation; Sell-side analysts; Private communication; Industry knowledge JEL Classifications: G10; G11; G23; M40;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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