Analyst Behavior Following Ipos: The 'Bubble Period' Evidence

Review of Financial Studies, Volume 21, Pages 101-133

48 Pages Posted: 20 Jul 2005 Last revised: 25 Apr 2019

See all articles by Daniel Bradley

Daniel Bradley

University of South Florida

Jay R. Ritter

University of Florida - Department of Finance, Insurance and Real Estate

Bradford D. Jordan

University of Florida; University of Florida - Department of Finance, Insurance and Real Estate

Date Written: July 1, 2005

Abstract

We examine over 7,400 analyst recommendations in the year after going public for IPOs from 1999-2000. Initiations at the end of the quiet period come almost exclusively from affiliated analysts, while initiations afterwards are predominantly from unaffiliated analysts. Once we control for timing, we find no evidence of a difference in market reaction to affiliated versus unaffiliated analyst initiations. Our results contradict prior findings that the market discounts recommendations from affiliated analysts, suggesting instead that the informational advantage possessed by affiliated analysts outweighs the greater conflicts of interest they may face. Finally, the amount of analyst coverage is related to the number of managing underwriters only for the smallest IPOs.

Keywords: IPO, analyst, quiet period, bubble

Suggested Citation

Bradley, Daniel and Ritter, Jay R. and Jordan, Bradford D., Analyst Behavior Following Ipos: The 'Bubble Period' Evidence (July 1, 2005). Review of Financial Studies, Volume 21, Pages 101-133, Available at SSRN: https://ssrn.com/abstract=758388 or http://dx.doi.org/10.2139/ssrn.758388

Daniel Bradley (Contact Author)

University of South Florida ( email )

Tampa, FL 33620
United States

Jay R. Ritter

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainesville, FL 32611
United States
(352) 846-2837 (Phone)
(352) 392-0301 (Fax)

HOME PAGE: http://https://site.warrington.ufl.edu/ritter

Bradford D. Jordan

University of Florida ( email )

Gainesville, FL 32611
United States

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainesville, FL 32611
United States

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