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http://ssrn.com/abstract=248008
 
 

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Marketing of Stocks by Brokerage Firms: The Role of Financial Analysts


Kee H. Chung


State University of New York at Buffalo - School of Management



Abstract:     
This paper examines the role of financial analysts as a marketing aid to brokerage firms. This study suggests that investors prefer to hold stocks of high-quality companies and that financial analysts help the marketing efforts of brokerage companies by focusing their analysis on such stocks. This paper uses S&P's common stock rankings as empirical proxies for firm quality and finds that stocks rated by S&P are followed by more analysts than those not rated. Furthermore, among those stocks rated by S&P, highly-rated stocks are followed by more analysts than poorly-rated stocks. This study also finds a significant increase (decrease) in analyst following when S&P upgrades (downgrades) quality rankings. Overall, empirical evidence supports the marketing hypothesis of analyst following.

Number of Pages in PDF File: 31

Keywords: Marketing, Financial analysts, Stock rankings, Cognitive error

JEL Classification: G24

working papers series





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Date posted: October 29, 2000  

Suggested Citation

Chung, Kee H., Marketing of Stocks by Brokerage Firms: The Role of Financial Analysts. Available at SSRN: http://ssrn.com/abstract=248008 or http://dx.doi.org/10.2139/ssrn.248008

Contact Information

Kee H. Chung (Contact Author)
State University of New York at Buffalo - School of Management ( email )
Buffalo, NY 14260
United States
716-645-3262 (Phone)
716-645-3823 (Fax)
HOME PAGE: http://mgt.buffalo.edu/home/faculty/academic/finance/faculty/keechung
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