IDEAS home Printed from
   My bibliography  Save this article

When Do Banks Listen to Their Analysts? Evidence from Mergers and Acquisitions


  • David Haushalter
  • Michelle Lowry


We examine the conflicts of interest and the flow of information between divisions of financial institutions. Using data on analyst recommendations and stockholdings of investment banks advising acquirers in mergers, we find evidence that information from investment banking flows to other divisions of the bank. Specifically, following a merger announcement, changes in a bank's stockholdings of the acquirer are positively associated with changes in recommendations by its analyst. This relationship, however, does not exist before the merger announcement. Additional tests show that the relationship between stockholdings and recommendations following a merger announcement is strongest when conflicts of interest for analysts are likely the smallest. The Author 2011. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail:, Oxford University Press.

Suggested Citation

  • David Haushalter & Michelle Lowry, 2011. "When Do Banks Listen to Their Analysts? Evidence from Mergers and Acquisitions," Review of Financial Studies, Society for Financial Studies, vol. 24(2), pages 321-357.
  • Handle: RePEc:oup:rfinst:v:24:y:2011:i:2:p:321-357

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Andreas Charitou & Irene Karamanou, 2020. "Sleeping with the enemy: should investment banks be allowed to engage in prop trading?," Review of Accounting Studies, Springer, vol. 25(2), pages 513-557, June.
    2. John R. Busenbark & Donald Lange & S. Trevis Certo, 2017. "Foreshadowing as Impression Management: Illuminating the Path for Security Analysts," Strategic Management Journal, Wiley Blackwell, vol. 38(12), pages 2486-2507, December.
    3. Hassan Tehranian & Mengxing Zhao & Julie L. Zhu, 2014. "Can Analysts Analyze Mergers?," Management Science, INFORMS, vol. 60(4), pages 959-979, April.
    4. Falko Fecht & Andreas Hackethal & Yigitcan Karabulut, 2018. "Is Proprietary Trading Detrimental to Retail Investors?," Journal of Finance, American Finance Association, vol. 73(3), pages 1323-1361, June.
    5. Yao-Min Chiang & Michelle Lowry & Yiming Qian, 2019. "The Information Advantage of Underwriters in IPOs," Management Science, INFORMS, vol. 65(12), pages 5721-5740, December.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:rfinst:v:24:y:2011:i:2:p:321-357. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.