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Fund Portfolio Holdings and Affiliated Analyst's Objectivity: Do Equity and Employment Relationship Matter?

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  • Yugang Yin

Abstract

The author investigates how the equity relationship between fund company and brokerage firm as well as employment relationship between analyst and brokerage firm affect affiliated fund stock portfolio holding and the affiliated analyst's objectivity. By using the specific data of such equity and employment relationship, the author finds that equity and employment relationship do matter in fund portfolio holdings and analyst objectivity. Specifically, analysts tend to release more optimal ratings on stocks that have been hold by the funds, and the funds tend to significantly reduce the stocks in their portfolio once the analysts have announced high ratings on the stocks. Moreover, the analysts in employment relationships with majority shareholders of funds and with a low reputation reveal worse objectivity. In addition, from the point of abnormal return, analysts in employment relationships with majority shareholders of funds and with a low reputation damage the interests of common investors.

Suggested Citation

  • Yugang Yin, 2018. "Fund Portfolio Holdings and Affiliated Analyst's Objectivity: Do Equity and Employment Relationship Matter?," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 19(1), pages 16-29, January.
    • Handle: RePEc:taf:hbhfxx:v:19:y:2018:i:1:p:16-29
    DOI: 10.1080/15427560.2017.1366493
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    Cited by:

    1. Xiaohong Shen & Gaoshan Wang & Yue Wang & Alfred Peris, 2021. "The Influence of Research Reports on Stock Returns: The Mediating Effect of Machine-Learning-Based Investor Sentiment," Discrete Dynamics in Nature and Society, Hindawi, vol. 2021, pages 1-14, December.
    2. Pruijssers, Jorien Louise & Singer, Gallia & Singer, Zvi & Tsang, Desmond, 2023. "Social influence pressures and the risk preferences of aspiring financial market professionals," Journal of Accounting Education, Elsevier, vol. 62(C).

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