Does Analyst Stock Ownership Affect Reporting Behavior?
City University London - Sir John Cass Business School; Rice University - Jesse H. Jones Graduate School of Business
January 27, 2009
An analyst who owns stock in the company she covers may be tempted to protect or enhance her personal interests. I examine how this conflict of interest affects the reporting of sell-side analysts. I identify and collect two samples, the first from SEC Form 144 filings, and the second from voluntary ownership disclosures. Ordered probit analyses show that owning-analyst recommendations are slightly more cautious than those of the control analysts but returns tests suggest the market generally does not react differentially to the two groups. I find little robust evidence that stock ownership leads to optimistic analyst reporting, however I do find that analysts who are consistently optimistic are owners.
Number of Pages in PDF File: 40
Keywords: Analyst, Incentives, Form 144, Stock ownership, Capital Markets
JEL Classification: G24, G29, D82, D84
Date posted: November 14, 2006 ; Last revised: January 27, 2009
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