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Does Analyst Stock Ownership Affect Reporting Behavior?

Rick Johnston

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

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Date posted: November 14, 2006 ; Last revised: January 27, 2009

Suggested Citation

Johnston, Rick, Does Analyst Stock Ownership Affect Reporting Behavior? (January 27, 2009). Available at SSRN: http://ssrn.com/abstract=944786 or http://dx.doi.org/10.2139/ssrn.944786

Contact Information

Rick M. Johnston (Contact Author)
Rice University - Jesse H. Jones Graduate School of Business ( email )
6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States
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