Incentives for Accuracy in Analyst Research

34 Pages Posted: 17 Feb 2009

See all articles by Patricia Crifo

Patricia Crifo

Ecole Polytechnique, Paris - Laboratoire d'Econometrie; Université Paris X Nanterre - Department of Economics; Center for Interuniversity Research and Analysis on Organization (CIRANO)

Hind Sami

University of Lyon - Lyon 2-COACTIS

Date Written: February 15, 2009

Abstract

This paper proposes a model to analyze the dynamic relationship between incentives contracts and analysts' effort in providing accurate research when both long term reputational concerns and short term incentives matter. We show that the analyst's compensation contract reflects his contribution to the firm's profits: full financial (performance based) incentives contracts are used to attract talented analysts while lower human capital analysts are offered a mix of monetary and non monetary (ethic based) incentives. Yet, high human capital analysts are tempted to prefer high short term rewards compared to long-run benefits of increasing reputation.

Keywords: Motivation, Reputation, Reporting, Investment analysts

JEL Classification: M54, M52, G24

Suggested Citation

Crifo, Patricia and Sami, Hind, Incentives for Accuracy in Analyst Research (February 15, 2009). Available at SSRN: https://ssrn.com/abstract=1343579 or http://dx.doi.org/10.2139/ssrn.1343579

Patricia Crifo

Ecole Polytechnique, Paris - Laboratoire d'Econometrie ( email )

Route de Saclay
Palaiseau, 91128
France

Université Paris X Nanterre - Department of Economics

Nanterre Cedex, 92001
France

Center for Interuniversity Research and Analysis on Organization (CIRANO)

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

Hind Sami (Contact Author)

University of Lyon - Lyon 2-COACTIS ( email )

Faculté de Sciences Economiques et de Gestion
16, quai Claude Bernard
Lyon, 69007
France

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
103
Abstract Views
552
rank
269,597
PlumX Metrics