Abstract

http://ssrn.com/abstract=1527855
 
 

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Equity Analysts Affiliated with Corporate Lenders


David C. Cicero


University of Alabama - Culverhouse College of Commerce & Business Administration

Swaminathan L. Kalpathy


Texas Christian University - M.J. Neeley School of Business

Johan Sulaeman


National University of Singapore (NUS) - Department of Finance; Southern Methodist University (SMU) - Edwin L. Cox School of Business

August 1, 2011


Abstract:     
We provide evidence that the research of equity analysts affiliated with corporate lenders reflects private information obtained through the commercial lending relationships. Lender-affiliated analysts improve the accuracy of their earnings forecasts on borrowers after a lending relationship is established, and publish more accurate research prior to adverse credit-related events. Lender-affiliated analysts’ accuracy gains increase in their geographic proximity to the lending activity. Furthermore, we find evidence that analysts induce a positive recommendation bias to help secure the lending business. Lending-related informational advantages persist beyond Regulation FD and the Global Settlement, but the strategic use of bias ends with these regulations.

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Date posted: December 24, 2009 ; Last revised: August 16, 2011

Suggested Citation

Cicero, David C. and Kalpathy, Swaminathan L. and Sulaeman, Johan, Equity Analysts Affiliated with Corporate Lenders (August 1, 2011). Available at SSRN: http://ssrn.com/abstract=1527855 or http://dx.doi.org/10.2139/ssrn.1527855

Contact Information

David C. Cicero
University of Alabama - Culverhouse College of Commerce & Business Administration ( email )
Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States
Swaminathan L. Kalpathy
Texas Christian University - M.J. Neeley School of Business ( email )
Fort Worth, TX 76129
United States
Johan Sulaeman (Contact Author)
National University of Singapore (NUS) - Department of Finance ( email )
Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore
HOME PAGE: http://sites.google.com/site/johansulaeman/
Southern Methodist University (SMU) - Edwin L. Cox School of Business ( email )
Dallas, TX 75225
United States
214-768-8284 (Phone)
HOME PAGE: http://jsulaeman.cox.smu.edu
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References:  68
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