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Political Contributions and Analyst Behavior

Danling Jiang

Florida State University - The College of Business

Alok Kumar

University of Miami - School of Business Administration

Kelvin Law

Tilburg University

June 25, 2015

Review of Accounting Studies, Forthcoming

We show that the personal traits of analysts, as revealed by their political donations, influence their forecasting behavior and stock prices. Analysts who contribute primarily to the Republican Party adopt a more conservative forecasting style. Their earnings forecast revisions are less likely to deviate from the forecasts of other analysts and are less likely to be bold. Their stock recommendations also contain more modest upgrades and downgrades. Overall, these analysts produce better quality research, which is recognized and rewarded by their employers, institutional investors, and news media. Stock market participants, however, do not fully recognize their superior ability as the market reaction following revisions by these analysts is weaker.

Number of Pages in PDF File: 57

Keywords: Equity Analysts, Political Contribution, Conservative Analysts, Forecasting Style, Market Reaction

JEL Classification: G14, G24, M41

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Date posted: October 3, 2010 ; Last revised: August 14, 2015

Suggested Citation

Jiang, Danling and Kumar, Alok and Law, Kelvin, Political Contributions and Analyst Behavior (June 25, 2015). Review of Accounting Studies, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1686238 or http://dx.doi.org/10.2139/ssrn.1686238

Contact Information

Danling Jiang
Florida State University - The College of Business ( email )
821 Academic Way
P.O. Box 3061110
Tallahassee, FL 32306-1110
United States
(850)645-1519 (Phone)
HOME PAGE: http://sites.google.com/site/danlingjiang
Alok Kumar (Contact Author)
University of Miami - School of Business Administration ( email )
514 Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)
HOME PAGE: http://moya.bus.miami.edu/~akumar
Kelvin Law
Tilburg University ( email )
P.O. Box 90153
Tilburg, 5000 LE
HOME PAGE: http://sites.google.com/site/kelvinlaw2012
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