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Financial Analysts and Their Contribution to Well-Functioning Capital Markets

Author

Listed:
  • Bradshaw, Mark
  • Ertimur, Yonca
  • O'Brien, Patricia

Abstract

Well-functioning capital markets rely on a complex set of institutions and participants that ensure capital is allocated to its best possible use, and that information flows between firms receiving capital and the investors who provide it. In this manuscript, we endeavor to understand whether, how, and under what circumstances sell-side research contributes to the functioning of capital markets. We review major findings in the literature, address significant regulatory and technological changes, and offer suggestions for future research.

Suggested Citation

  • Bradshaw, Mark & Ertimur, Yonca & O'Brien, Patricia, 2017. "Financial Analysts and Their Contribution to Well-Functioning Capital Markets," Foundations and Trends(R) in Accounting, now publishers, vol. 11(3), pages 119-191, December.
    • Handle: RePEc:now:fntacc:1400000042
    DOI: 10.1561/1400000042
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    References listed on IDEAS

    as
    1. Shores, D, 1990. "The Association Between Interim Information And Security Returns Surrounding Earnings Announcements," Journal of Accounting Research, Wiley Blackwell, vol. 28(1), pages 164-181.
    2. Trueman, Brett, 1994. "Analyst Forecasts and Herding Behavior," The Review of Financial Studies, Society for Financial Studies, vol. 7(1), pages 97-124.
    3. Darren T. Roulstone, 2003. "Analyst Following and Market Liquidity," Contemporary Accounting Research, John Wiley & Sons, vol. 20(3), pages 552-578, September.
    4. Wu, Joanna Shuang & Zang, Amy Y., 2009. "What determine financial analysts' career outcomes during mergers?," Journal of Accounting and Economics, Elsevier, vol. 47(1-2), pages 59-86, March.
    5. Stickel, Se, 1990. "Predicting Individual Analyst Earnings Forecasts," Journal of Accounting Research, Wiley Blackwell, vol. 28(2), pages 409-417.
    6. Yu, Fang (Frank), 2008. "Analyst coverage and earnings management," Journal of Financial Economics, Elsevier, vol. 88(2), pages 245-271, May.
    7. Stickel, Scott E, 1992. "Reputation and Performance among Security Analysts," Journal of Finance, American Finance Association, vol. 47(5), pages 1811-1836, December.
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    More about this item

    Keywords

    Analysts; Sell-side research; Capital markets; Accounting information;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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