The Influence of Buy-Side Analysts on Mutual Fund Trading
40 Pages Posted: 16 Feb 2009 Last revised: 27 Jan 2014
Date Written: July 13, 2013
We present evidence on the trading and performance impact of buy-side analysts. Using data provided by a large global asset manager, we relate buy-side analysts' recommendations to fund transactions on a daily basis. We show that buy-side analysts significantly influence trading decisions: Fund managers strongly follow recent recommendation revisions, even after controlling for other trading determinants. Positive abnormal returns to buy-side analysts' revisions are also reflected in the performance of mutual fund trades: Trades triggered by buy-side recommendations have higher returns than other trades. Overall, the impact of buy-side analysts is more pronounced than that of sell-side analysts.
Keywords: Buy-side analysts, analyst recommendations, mutual funds, investment decisions, investment performance
JEL Classification: G23, G11, M41, G29
Suggested Citation: Suggested Citation