Abstract

http://ssrn.com/abstract=2010777
 
 

Footnotes (54)



 


 



Sending Mixed Messages: Investor Interpretations of Disclosures of Analyst Stock Ownership


Ahmed Taha


Pepperdine University School of Law

John V. Petrocelli


Wake Forest University

July 1, 2013

Psychology, Public Policy, and Law, Forthcoming

Abstract:     
Sell-side securities analysts who recommend stocks that they own have a conflict of interest. If investors buy the stocks in response to the analysts’ recommendations, the stocks’ prices will rise, increasing the analysts’ personal wealth. Thus, analysts are legally required to disclose financial interests in securities of companies they cover. However, investors might view this disclosure favorably – for example, as a sign of the analyst’s confidence in the stock – rather than unfavorably as the law intends. This article presents the results of an experiment indicating that investors view analyst stock ownership more unfavorably than favorably. In addition, the experiment’s results suggest that disclosures that also briefly explain why analyst stock ownership creates a conflict of interest would lead investors to view it even more unfavorably.

Keywords: Analyst, Conflict of Interest, Disclosure, Stock, Broker-Dealer, Investor, Investor Protection

JEL Classification: K20, K22

Accepted Paper Series


Not Available For Download

Date posted: February 25, 2012 ; Last revised: July 1, 2013

Suggested Citation

Taha, Ahmed and Petrocelli, John V., Sending Mixed Messages: Investor Interpretations of Disclosures of Analyst Stock Ownership (July 1, 2013). Psychology, Public Policy, and Law, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2010777 or http://dx.doi.org/10.2139/ssrn.2010777

Contact Information

Ahmed Taha (Contact Author)
Pepperdine University School of Law ( email )
24255 Pacific Coast Highway
Malibu, CA 90263
United States
John V. Petrocelli
Wake Forest University ( email )
2601 Wake Forest Road
Winston-Salem, NC 27109
United States
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