All-Star Analyst Turnover, Investment Bank Market Share, and the Performance of Initial Public Offerings
41 Pages Posted: 20 Jan 2003
Date Written: November 12, 2002
The impact of all-star analyst turnover on initial public offering market share and the performance of initial public offerings is examined. Overall, we find that neither "winners" nor "losers" in the battle for all-star analysts experience a significant change in market share. In order to offset the loss of a star analyst, investment banks become more aggressive by taking on more speculative deals. The banks gaining the all-stars also take on more speculative issuers. Although forecast accuracy increases following the arrival of a star, forecast optimism does not change, which suggests that analyst objectivity is not affected. Overall, the evidence is not consistent with the commonly held view that analysts have a significant impact on a bank's ability to attract IPO deal flow.
Keywords: IPO, all-star analyst, market share, underpricing, IPO performance
JEL Classification: G24, G32
Suggested Citation: Suggested Citation