Marketing of Stocks by Brokerage Firms: The Role of Financial Analysts

Financial Management

Posted: 6 Oct 2000

See all articles by Kee H. Chung

Kee H. Chung

State University of New York at Buffalo - School of Management

Multiple version iconThere are 2 versions of this paper

Abstract

This paper examines the role of financial analysts as a marketing aid to brokerage firms. This study suggests that investors prefer to hold stocks of high-quality companies and that financial analysts help the marketing efforts of brokerage companies by focusing their analysis on such stocks. This paper uses S&P's common stock rankings as empirical proxies for firm quality and finds that stocks rated by S&P are followed by more analysts than those not rated. Furthermore, among those stocks rated by S&P, highly-rated stocks are followed by more analysts than poorly-rated stocks. This study also finds a significant increase (decrease) in analyst following when S&P upgrades (downgrades) quality rankings. Overall, empirical evidence supports the marketing hypothesis of analyst following.

Keywords: Marketing, Financial analysts, Stock rankings, Cognitive error

JEL Classification: G24

Suggested Citation

Chung, Kee H., Marketing of Stocks by Brokerage Firms: The Role of Financial Analysts. Financial Management. Available at SSRN: https://ssrn.com/abstract=243766

Kee H. Chung (Contact Author)

State University of New York at Buffalo - School of Management ( email )

Buffalo, NY 14260
United States
716-645-3262 (Phone)
716-645-3823 (Fax)

HOME PAGE: http://mgt.buffalo.edu/faculty/academic-departments/finance/faculty/kee-chung.html

Register to save articles to
your library

Register

Paper statistics

Abstract Views
901
PlumX Metrics