Are Financial Analysts of IPO Firms Under Pressure: The European Evidence

30 Pages Posted: 19 Jan 2012 Last revised: 27 Sep 2012

Multiple version iconThere are 2 versions of this paper

Date Written: January 1, 2012


Long run returns of IPO firms’ recommendations in Europe reveal possible conflicts of interest and pressures faced by financial analysts over the 1991-2005 period. Nevertheless, recent European legislations about investment research have led to better long run performance of IPO firms’ recommendations issued by affiliated analysts. Findings reveal that market participants do not fully incorporate the perceived value of recommendations. Indeed, difference between affiliated and unaffiliated analysts’ recommendations is statistically significant over one, three or five year horizon. The timing of recommendations specifies that investors pay more attention to affiliated analysts’ recommendations made later in the aftermarket. This result could suggest that the later is the recommendation made in the IPO aftermarket the weaker is the pressure faced by affiliated analysts.

Keywords: Initial Public Offering, conflicts of interest, financial analysts, long run performance

JEL Classification: G14, G24

Suggested Citation

Boissin, Romain, Are Financial Analysts of IPO Firms Under Pressure: The European Evidence (January 1, 2012). Available at SSRN: or

Romain Boissin (Contact Author)

University of Montpellier ( email )

Avenue de la Mer Site Richter
163 Rue Auguste Broussonnet
Montpellier, Cedex 2 34090

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