The Activities of Buy-Side Analysts and the Determinants of Their Stock Recommendations
51 Pages Posted: 25 Jun 2014 Last revised: 30 Dec 2016
Date Written: June 13, 2016
We survey 344 buy-side analysts from 181 investment firms and conduct 16 detailed follow-up interviews to gain insights into the activities of buy-side analysts, including the determinants of their compensation, the inputs to their stock recommendations, their beliefs about financial reporting quality, and the role of sell-side analysts in buy-side research. One important finding is that 10-K or 10-Q reports are more useful than quarterly conference calls and management earnings guidance for determining buy-side analysts’ stock recommendations. Our results also suggest that sell-side analysts add value by providing buy-side analysts with in-depth industry knowledge and access to company management.
Keywords: buy-side analysts, stock recommendations, compensation, private communication, industry knowledge, sell-side analysts
JEL Classification: G10, G11, G23, M40
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