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Analyst Behavior Following IPOs: The 'Bubble Period' Evidence

Author

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  • Daniel J. Bradley
  • Bradford D. Jordan
  • Jay R. Ritter

Abstract

We examine over 7400 analyst recommendations made in the year after going public for IPOs from 1999 to 2000. Initiations of coverage at the end of the quiet period come almost exclusively from affiliated analysts, whereas initiations afterward are predominantly from unaffiliated analysts. Contrary to previous findings, we find no evidence that the market discounts recommendations from affiliated analysts once we control for recommendation characteristics and timing. Moreover, analyst coverage in the first year is not affected by underpricing, and after the flurry of initiations at the end of the quiet period, the number of analysts covering a firm during the following 11 months is unrelated to the number of managing underwriters. (JEL G12, G14, G24) The Author 2006. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Daniel J. Bradley & Bradford D. Jordan & Jay R. Ritter, 2008. "Analyst Behavior Following IPOs: The 'Bubble Period' Evidence," The Review of Financial Studies, Society for Financial Studies, vol. 21(1), pages 101-133, January.
    • Handle: RePEc:oup:rfinst:v:21:y:2008:i:1:p:101-133
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    File URL: http://hdl.handle.net/10.1093/rfs/hhl028
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    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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