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Career Concerns of Banking Analysts

47 Pages Posted: 24 Apr 2015 Last revised: 19 Apr 2017

Joanne Horton

University of Exeter Business School

George Serafeim

Harvard University - Harvard Business School

Shan Wu

China Europe International Business School (CEIBS); University of Exeter Business School

Date Written: March 24, 2017

Abstract

We study how career concerns influence banking analysts’ forecasts. Banking analysts’ first (last) earnings forecast of the year is relatively more optimistic (pessimistic) for a bank that could be their future employer. This pattern is not observed when the same analysts forecast earnings of banks unlikely to be their future employer. We use the Global Settlement as an exogenous shock on career concerns and show that this forecast pattern is more pronounced after the Settlement. Moreover, we find evidence that more biased analysts in their forecasts of potential future employers are more likely to move to a higher reputation bank.

Keywords: analysts, conflicts of interest, career concerns, bias, labor market, sell-side analysts

JEL Classification: G4, M4

Suggested Citation

Horton, Joanne and Serafeim, George and Wu, Shan, Career Concerns of Banking Analysts (March 24, 2017). Journal of Accounting & Economics (JAE), Volume 63, Issues 2-3, April-May 2017, Pages 231–252.. Available at SSRN: https://ssrn.com/abstract=2596966 or http://dx.doi.org/10.2139/ssrn.2596966

Joanne Horton

University of Exeter Business School ( email )

Streatham Court
Xfi Building, Rennes Dr.
Exeter, EX4 4JH
United Kingdom

George Serafeim (Contact Author)

Harvard University - Harvard Business School ( email )

381 Morgan Hall
Boston, MA 02163
United States

HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=15705

Shan Wu

China Europe International Business School (CEIBS) ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

University of Exeter Business School ( email )

Streatham Court
Xfi Building, Rennes Dr.
Exeter, EX4 4JH
United Kingdom

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