Corporate Culture and Analyst Catering

Journal of Accounting and Economics, forthcoming

55 Pages Posted: 9 Aug 2015 Last revised: 30 Aug 2018

See all articles by Joseph Pacelli

Joseph Pacelli

Indiana University - Kelley School of Business - Department of Accounting

Date Written: August 30, 2018

Abstract

This study examines the relation between financial institutions’ corporate culture and the quality of analysts’ research services. Using data collected from the Financial Industry Regulatory Authority, I measure the weakness of financial institutions’ corporate culture based on violations observed in securities activities unrelated to equity research. I find evidence demonstrating an association between weak corporate culture and analysts’ providing research products catered to institutional clients at the expense of individual investors. Specifically, FINRA violations are associated with both (i) less accurate forecasts and less informative reports, and (ii) higher institutional commission revenues and more broker-hosted conferences for select institutional clients.

Keywords: Corporate Culture; Financial Institutions; Security Analysts; Conflicts of Interest

JEL Classification: G14, G21, G24, G28, M14

Suggested Citation

Pacelli, Joseph, Corporate Culture and Analyst Catering (August 30, 2018). Journal of Accounting and Economics, forthcoming. Available at SSRN: https://ssrn.com/abstract=2641041 or http://dx.doi.org/10.2139/ssrn.2641041

Joseph Pacelli (Contact Author)

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States

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