Abstract

https://ssrn.com/abstract=426060
 
 

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The Impact of All-Star Analyst Job Changes on Their Coverage Choices and Investment Banking Deal Flow


Ajay Khorana


Georgia Institute of Technology - Finance Area

Ajay Patel


Wake Forest University, School of Business

P. Raghavendra Rau


University of Cambridge

Jonathan Clarke


Georgia Institute of Technology - Scheller College of Business

December 1, 2005

Journal of Financial Economics (JFE), Forthcoming
Utah Winter Finance Conference

Abstract:     
Using a sample of all-star analysts who switch investment banks between 1988 and 1999, we examine (1) whether analyst behavior is influenced by investment banking relationships and (2) whether analyst behavior affects investment banking deal flow (debt and equity underwriting and corporate control transactions). Although the stock coverage decision is dependent on the investment banking relationship with the client firms, we find no evidence that analysts change their optimism or recommendation levels when joining a new firm. Investment banking deal flow is related to analyst reputation only for equity underwriting transactions. For debt underwriting and M&A transactions, after controlling for bank reputation, analyst reputation does not matter. There is no evidence that issuing optimistic earnings forecasts or recommendations affects investment banking deal flow.

Number of Pages in PDF File: 34

Keywords: All-star analysts, analyst coverage, market share, investment bank relationships, conflicts of interests

JEL Classification: G24, G32


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Date posted: August 30, 2003 ; Last revised: May 26, 2010

Suggested Citation

Khorana, Ajay and Patel, Ajay and Rau, P. Raghavendra and Clarke, Jonathan, The Impact of All-Star Analyst Job Changes on Their Coverage Choices and Investment Banking Deal Flow (December 1, 2005). Journal of Financial Economics (JFE), Forthcoming; Utah Winter Finance Conference. Available at SSRN: https://ssrn.com/abstract=426060 or http://dx.doi.org/10.2139/ssrn.426060

Contact Information

Ajay Khorana
Georgia Institute of Technology - Finance Area ( email )
755 Ferst Drive
Atlanta, GA 30332
United States
404-894-5110 (Phone)
404-894-6030 (Fax)

Ajay Patel
Wake Forest University, School of Business ( email )
1834 Wake Forest Road
Building 60, Farrell Hall
Winston-Salem, NC 27106
United States
336-758-5575 (Phone)
336-758-4514 (Fax)
P. Raghavendra Rau (Contact Author)
University of Cambridge ( email )
Cambridge Judge Business School
Trumpington Street
Cambridge, Cambridgeshire CB21AG
United Kingdom
3103626793 (Phone)
HOME PAGE: http://www.raghurau.com/
Jonathan Clarke
Georgia Institute of Technology - Scheller College of Business ( email )
800 West Peachtree St.
Atlanta, GA 30308
United States
404-894-4929 (Phone)
404-894-6030 (Fax)
HOME PAGE: http://mgt.gatech.edu/directory/clarke.html

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