Do Sell-Side Security Analysts Act as Prophets?

Do Sell-Side Stock Analysts Exhibit Escalation of Commitment?

This paper presents evidence that when an analyst makes an out-of-consensus forecast of a company's quarterly earnings that turns out to be incorrect, she escalates her commitment to maintaining an out-of-consensus view on the company. Relative to an analyst who was close to the consensus, the out-of-consensus analyst adjusts her forecasts for the current fiscal year's earnings less in the dire...

Crowdsourcing Forecasts: competition for sell-side analysts?

Recent research has begun to question the importance of forecasts to sell-side analysts. Prior research established the co-existence of longer horizon optimism and short-term pessimism in sell-side forecasts. These factors motivate us to explore a new phenomenon – crowdsourcing, as an alternative source of forecasts. We obtain revenue and earnings forecasts from estimize, an entity which crowds...

A comparison of buy-side and sell-side analysts

Sell-Side Financial Analysts and the CFA Designation Program

We examine the effects the Chartered Financial Analyst (CFA) designation program has on recommendation performance and career outcomes of the analysts who complete the curriculum and become charterholders. For these analysts, both their recommendation performance and their chances of making the Institutional Investor’s All-America Research Team increase during 1993–2015. These effects are attri...

Sell-Side Debt Analysts and Debt Market Efficiency

We explore sell-side debt analysts’ contributions to the efficiency of securities markets. We document that debt returns lag equity returns less when debt research coverage exists, consistent with debt analysts facilitating the process by which available information is impounded in debt prices. The effect is incremental to, but comparable in magnitude to, hedge fund ownership’s effect. No such ...