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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

May 5, 2014

McCombs Research Paper Series No. FIN-01-12

Abstract:     
We show that political preferences of analysts, as revealed by their personal political contributions, are correlated with their forecasting styles and influence the information dissemination process. Analysts who contribute primarily to the Republican Party exhibit a more conservative forecasting style. Their earnings forecast revisions are less likely to be bold, while their stock recommendations contain more modest upgrades and downgrades. Further, their forecasts are more accurate since conservative behavior partially mitigates the adverse effects of known analyst biases. The market reaction following revisions by Republican donor analysts is weaker even though their forecasts are more accurate. Taken together, these findings suggest that personal traits of analysts influence their forecasting behavior and stock prices.

Number of Pages in PDF File: 61

Keywords: Political contribution, Republican, Conservative, Analyst, Forecasting Style

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Date posted: October 3, 2010 ; Last revised: June 25, 2014

Suggested Citation

Jiang, Danling and Kumar, Alok and Law, Kelvin, Political Contributions and Analyst Behavior (May 5, 2014). McCombs Research Paper Series No. FIN-01-12. 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://mailer.fsu.edu/~djiang/
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
Netherlands
HOME PAGE: http://sites.google.com/site/kelvinlaw2012
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