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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 …
Analyst Teams, Bingxu Fang, Ole-Kristian Hope
Analyst Teams, Bingxu Fang, Ole-Kristian Hope
Research Collection School Of Accountancy
This paper examines the impact of teamwork on sell-side analysts’ performance. Using a hand-collected sample of over 50,000 analyst research reports, we find that analyst teams issue more than 70% of annual earnings forecasts. In contrast, most prior research implicitly assumes that forecasts are issued by individual analysts. We document that analyst teams generate more accurate earnings forecasts than individual analysts and that the stock market reacts more strongly to forecast revisions issued by teams. Analyst teams also cover more firms, issue earnings forecasts more frequently, and issue less stale forecasts. Analysts working in teams are more likely to be …
Hedge Funds And Their Prime Broker Analysts, Sung Gon Chung, Manoj Kulchania, Melvyn Teo
Hedge Funds And Their Prime Broker Analysts, Sung Gon Chung, Manoj Kulchania, Melvyn Teo
Research Collection Lee Kong Chian School Of Business
Are sell-side analysts reluctant to go against the investment views of their hedge funds when these hedge funds are their prime brokerage clients? We show that prime broker analysts tend to upgrade stocks recently bought by their clients. For stocks with upgraded recommendations, post-announcement cumulative abnormal returns are significantly lower for those purchased by the prime brokerage clients. Our results are stronger with high-dollar-turnover clients who generate more trading commissions. We also find that a hedge fund with a large bet on a stock has a stronger incentive to pressure the fund’s prime brokers to issue a favorable recommendation on …