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Analyst firm parent–subsidiary relationship and conflict of interest: evidence from IPO recommendations

Analyst firm parent–subsidiary relationship and conflict of interest: evidence from IPO... We uncover a new source for the conflict of interest in analyst coverage existed before the Regulation FD period by examining whether recommendations within the parent–subsidiary (PS) relationship are more optimistic and whether they have better investment value than non‐PS recommendations. We find evidence consistent with the conflict of interest: PS analysts on average issue more optimistic recommendations, but their recommendations have worse or no better investment value in the calendar‐time portfolio analysis. Analyst firm PS relationship is another source for the conflict of interest in analyst coverage that has not been identified before. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting & Finance Wiley

Analyst firm parent–subsidiary relationship and conflict of interest: evidence from IPO recommendations

Accounting & Finance , Volume 53 (3) – Sep 1, 2013

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References (76)

Publisher
Wiley
Copyright
© 2012 The Author. Accounting and Finance © 2012 AFAANZ
ISSN
0810-5391
eISSN
1467-629X
DOI
10.1111/j.1467-629X.2012.00476.x
Publisher site
See Article on Publisher Site

Abstract

We uncover a new source for the conflict of interest in analyst coverage existed before the Regulation FD period by examining whether recommendations within the parent–subsidiary (PS) relationship are more optimistic and whether they have better investment value than non‐PS recommendations. We find evidence consistent with the conflict of interest: PS analysts on average issue more optimistic recommendations, but their recommendations have worse or no better investment value in the calendar‐time portfolio analysis. Analyst firm PS relationship is another source for the conflict of interest in analyst coverage that has not been identified before.

Journal

Accounting & FinanceWiley

Published: Sep 1, 2013

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