47 Pages Posted: 24 Apr 2015 Last revised: 19 Apr 2017
Date Written: March 24, 2017
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: 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
By Jonas Heese