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Analyst Recommendation Bias and Brokerage House Shareholding

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  • Masahito Kato

    (Graduate School of Economics, Kobe University)

Abstract

When a brokerage house owns a firm fs stock, a capital relationship is createdbetween the brokerage house and that firm. This paper examines the effect the capital relationship between a brokerage house and a firm has on the content of a recommendation,and the results are as follows. First, the capital relationship between a brokerage house and a firm creates an optimistic bias in recommendations. Second, the stronger the capital relationship between a brokerage house and a firm, the larger the optimistic bias in recommendations.

Suggested Citation

  • Masahito Kato, 2016. "Analyst Recommendation Bias and Brokerage House Shareholding," Discussion Papers 1635, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:1635
    as

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    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2016/1635.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Analyst; Recommendation; Conflicts of interest; Brokerage house; Shareholdings;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • 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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