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The influence of buy-side analysts on mutual fund trading

Listed author(s):
  • Frey, Stefan
  • Herbst, Patrick
Registered author(s):

    We present evidence on the trading and performance impact of buy-side analysts. Using data provided by a large global asset manager, we relate buy-side analysts’ recommendations to fund transactions on a daily basis. We show that buy-side analysts significantly influence trading decisions: Fund managers strongly follow recent recommendation revisions, even after controlling for other trading determinants. Positive abnormal returns to buy-side analysts’ revisions are also reflected in the performance of mutual fund trades: Trades triggered by buy-side recommendations have higher returns than other trades. Overall, the impact of buy-side analysts is more pronounced than that of sell-side analysts.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0378426614000211
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    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 49 (2014)
    Issue (Month): C ()
    Pages: 442-458

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    Handle: RePEc:eee:jbfina:v:49:y:2014:i:c:p:442-458
    DOI: 10.1016/j.jbankfin.2014.01.007
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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