Investment Banking and Analyst Objectivity: Evidence from Analysts Affiliated with Mergers and Acquisitions Advisors

abstract

• AbstractWe find evidence that conflicts of interest arising from mergers and acquisitions (M&A) relations influence analysts' recommendations, corroborating regulators' and practitioners' suspicions in a setting, i.e., M&A relations, not previously examined in research on analyst conflicts. In addition, the M&A context allows us to disentangle the conflict of interest effect from selection bias. We find that analysts affiliated with acquirer advisors upgrade acquirer stocks around M&A deals, even around all-cash deals, in which selection bias is unlikely. Also consistent with conflict of interest but not selection bias, target-affiliated analysts publish optimistic reports about acquirers after, but not before, the exchange ratio of an all-stock deal is set.

authors

• Kolasinski, Adam

author list (cited authors)

• Kolasinski, A. C., & Kothari, S. P

citation count

• 107

complete list of authors

• Kolasinski, Adam C||Kothari, SP

publication date

• January 2008

publisher

• Cambridge University Press (CUP)  Publisher

published in

• Journal of Financial and Quantitative Analysis  Journal

keywords

• Analysts
• Conflict Of Interest
• Corporate Finance
• Investment Banking

Digital Object Identifier (DOI)

• 10.1017/s0022109000014368

start page

• 817

end page

• 842

volume

• 43

issue

• 4

URL

• http%3A%2F%2Fdx.doi.org%2F10.1017%2Fs0022109000014368

user-defined tag

• 16 Peace, Justice and Strong Institutions