Abstract

http://ssrn.com/abstract=2139602
 


 



Did They Get What They Paid For? The Global Analyst Research Settlement and Analyst Research Quality


William L. Buslepp


Texas Tech University - Area of Accounting

Ryan Casey


University of Illinois at Chicago

George Ryan Huston


University of South Florida - School of Accountancy; Florida State University - Department of Accounting

August 31, 2012


Abstract:     
We examine the impact of a specific facet of the Global Research Analyst Settlement (Global Settlement) - the $460 million spent to procure independent analyst research. We compare independent research funded by the Global Settlement to that of the sanctioned investment banks as well as that of independent research firms not receiving such funding. Our results suggest that funded research is of lower quality than that of the sanctioned banks and non-funded independent research based on three separate measures of research quality: future performance of recommendations, the consistency between recommendations and intrinsic value, and the market reaction to the recommendations. Additionally, the results suggest two reasons for the failure of the independent research provider program: the research firms chosen to participate in the program were of lower quality and there was a lack of incentives for quality research. Overall, we find that the provision relating to funded independent research did not meet its stated intentions.

Number of Pages in PDF File: 47

Keywords: Sell-side analysts, Independent research, Global Settlement, Recommendations, Valuation estimates, Valuation heuristics

JEL Classification: G24

working papers series


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Date posted: September 1, 2012 ; Last revised: August 31, 2013

Suggested Citation

Buslepp, William L. and Casey, Ryan and Huston, George Ryan, Did They Get What They Paid For? The Global Analyst Research Settlement and Analyst Research Quality (August 31, 2012). Available at SSRN: http://ssrn.com/abstract=2139602 or http://dx.doi.org/10.2139/ssrn.2139602

Contact Information

William L. Buslepp (Contact Author)
Texas Tech University - Area of Accounting ( email )
P.O. Box 42101
Lubbock, TX 79409
United States
Ryan J. Casey
University of Illinois at Chicago ( email )
601 South Morgan Street, 2327 UH
Chicago, IL 60607
United States
3129964284 (Phone)
George Ryan Huston
University of South Florida - School of Accountancy ( email )
4202 E. Fowler Avenue, BSN 3403
Tampa, FL 33620-5500
United States
(813) 974-6597 (Phone)
Florida State University - Department of Accounting ( email )
Rovetta Business Bldg. (RBA)
College of Business
Tallahassee, FL 32306-1110
United States
8506447883 (Phone)
8506448234 (Fax)
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