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Articles 1 - 8 of 8
Full-Text Articles in Business
Inside Brokers, Frank Weikai Li, Abhiroop Mukherjee, Rik Sen
Inside Brokers, Frank Weikai Li, Abhiroop Mukherjee, Rik Sen
Research Collection Lee Kong Chian School Of Business
We identify the broker each corporate insider trades through, and find that analysts and mutual fund managers affiliated with such “inside brokers” have a substantial information advantage on the insider’s firm. Affiliated analysts issue more accurate earnings forecasts, and affiliated mutual funds trade the insider’s stock more profitably than their peers, following insider trades through their brokerage. Notably, this advantage persists well after these insider trades are publicly disclosed. Our results challenge the prevalent perception that information asymmetry arising from insider trading is acute only before trade disclosure, and suggest that brokers facilitating these trades are in a position to …
Leveling The Playing Field Between Large And Small Institutions: Evidence From The Sec’S Xbrl Mandate, Nilabhra Bhattacharya, Young Jun Cho, Jae B. Kim
Leveling The Playing Field Between Large And Small Institutions: Evidence From The Sec’S Xbrl Mandate, Nilabhra Bhattacharya, Young Jun Cho, Jae B. Kim
Research Collection School Of Accountancy
We investigate how XBRL adoption affects smaller institutions’ access to financial statement information relative to their larger counterparts. We examine three aspects of trading responsiveness: abnormal trading volume, response speed to 10-K information, and decision to trade immediately following the 10-K filing. With regard to all three aspects of trading responsiveness, we find that small institutions’ responsiveness to 10-K news increases significantly more relative to the change experienced by large institutions from the pre- to post-XBRL periods. We further document that small institutions’ stock picking skills in the 10-K filing period increase more compared to those of large institutions following …
The Effect Of Board Independence On Information Asymmetry, Beng Wee Goh, Jimmy Lee, Jeffrey Ng, Kevin Ow Yong
The Effect Of Board Independence On Information Asymmetry, Beng Wee Goh, Jimmy Lee, Jeffrey Ng, Kevin Ow Yong
Research Collection School Of Accountancy
Boards have an important role in ensuring that investors’ interests are protected. Our paper first examines whether the independence of a firm's board affects information asymmetry among investors. We provide evidence that greater board independence leads to lower information asymmetry. Next, we provide evidence that more voluntary disclosure and greater analyst coverage are two underlying mechanisms via which greater board independence reduces information asymmetry. Of the two mechanisms, we find that analyst coverage is more significant in influencing how board independence affects information asymmetry. Overall, our paper contributes to a better understanding of the effect of board independence on information …
Politically Connected Analysts, Michael B. Mcdonald
Politically Connected Analysts, Michael B. Mcdonald
Doctoral Dissertations
This dissertation examines politically-connected equity analysts, i.e., analysts that make large political donations. I find that these big donor analysts make more accurate earnings forecasts than other small donor and non-donor analysts, and the accuracy of these forecasts decreases after a big donor analyst ceases his donations. These analysts become more accurate after they become large political donors, suggesting their enhanced performance derives from an advantage gained via their political activity. These results are stronger when (i) the analyst works or lives in the state represented by the benefiting politician, and (ii) the benefiting politician serves on a Congressional committee …
Seeing Is Believing: Do Analysts Benefit From Site Visits, Qiang Cheng, Fei Du, Xin Wang, Yutao Wang
Seeing Is Believing: Do Analysts Benefit From Site Visits, Qiang Cheng, Fei Du, Xin Wang, Yutao Wang
Research Collection School Of Accountancy
Using the unique data of analysts’ site visits to Chinese listed companies, we examine whether and how analysts’ site visits help improve their forecast performance. We find that the forecast accuracy of analysts improves after they visit the target firms and this improvement still holds after controlling for the concurrent change in the forecast accuracy of analysts who do not conduct site visits. Such an improvement is more pronounced for firms with better corporate governance; for more experienced analysts; and for firms with higher earnings volatility. Moreover, the improvement of forecast accuracy is less pronounced when current site visits are …
What Are Analysts Really Good At?, Rong Wang, Leonardo Madureira, Rong Wang, Tzachi Zach
What Are Analysts Really Good At?, Rong Wang, Leonardo Madureira, Rong Wang, Tzachi Zach
Research Collection Lee Kong Chian School Of Business
Sell-side analysts employ different benchmarks when defining their stock recommendations. For example, a ‘buy’ for some brokers means the stock is expected to outperform its peers in the same sector (“industry benchmarkers”), while for other brokers it means the stock is expected to outperform the market (“market benchmarkers”), or just some absolute return (“total benchmarkers”). We use these benchmarks to analyze the role of stock picking, industry picking and market timing in contributing to the performance of stock recommendations. We are able to do so given that different benchmarks suggest the use of different sets of abilities. Analysis of the …
Industry Recommendations: Characteristics, Investment Value, And Relation To Firm Recommendations, Ohad Kadan, Madureira Leonardo, Rong Wang, Tzachi Zach
Industry Recommendations: Characteristics, Investment Value, And Relation To Firm Recommendations, Ohad Kadan, Madureira Leonardo, Rong Wang, Tzachi Zach
Research Collection Lee Kong Chian School Of Business
We study analysts’ industry recommendations. We find that the distribution of industry recommendations is quite balanced. Analysts show more optimism towards industries with high levels of R&D, past profitability and past returns. Industry recommendations possess investment value as portfolios based on these recommendations generate risk-adjusted abnormal returns. Finally, industry recommendations contain information which is orthogonal to that included in firm recommendations, and more so for brokers who benchmark their firm recommendations to industry peers. Consequently, the investment value of analysts’ recommendations is enhanced when both industry and firm recommendations are used.
The Essential Role Of Securities Regulation, Zohar Goshen, Gideon Parchomovsky
The Essential Role Of Securities Regulation, Zohar Goshen, Gideon Parchomovsky
All Faculty Scholarship
This Article posits that the essential role of securities regulation is to create a competitive market for sophisticated professional investors and analysts (information traders). The Article advances two related theses-one descriptive and the other normative. Descriptively, the Article demonstrates that securities regulation is specifically designed to facilitate and protect the work of information traders. Securities regulation may be divided into three broad categories: (i) disclosure duties; (ii) restrictions on fraud and manipulation; and (iii) restrictions on insider trading-each of which contributes to the creation of a vibrant market for information traders. Disclosure duties reduce information traders' costs of searching and …