Security Analysts as Frame-Makers

Abstract:     
Security analysts offer a privileged entry point to study the collective construction of worth in markets characterized by Knightian uncertainty. Analysts have been portrayed as information-processors by neoclassic economists and as conformists by neo-institutional sociologists, but neither perspective explains why investors find reports useful. To find out, we content-analyze the reports written by the top-rated Amazon analyst, Henry Blodget, during the years of the Internet bubble, 1998-2001. We find that Blodget's reports offered a new calculative frame that allowed investors to analyze firms in a context of Knightian uncertainty when no stable information or shared predictions the future existed. We conceive analysts as makers of calculative frames. Analysts calculate, but they do so within a framework. We then consider the social dynamics involved in the creation, diffusion and abandonment of calculative frames.

Keywords: Securities analysts, calculative frames, economic sociology

JEL Classifications: L84, G24, G14

Working Paper Series