Analyst Behavior Following Ipos: The 'Bubble Period' Evidence
Review of Financial Studies, Volume 21, Pages 101-133
48 Pages Posted: 20 Jul 2005 Last revised: 25 Apr 2019
Date Written: July 1, 2005
We examine over 7,400 analyst recommendations in the year after going public for IPOs from 1999-2000. Initiations at the end of the quiet period come almost exclusively from affiliated analysts, while initiations afterwards are predominantly from unaffiliated analysts. Once we control for timing, we find no evidence of a difference in market reaction to affiliated versus unaffiliated analyst initiations. Our results contradict prior findings that the market discounts recommendations from affiliated analysts, suggesting instead that the informational advantage possessed by affiliated analysts outweighs the greater conflicts of interest they may face. Finally, the amount of analyst coverage is related to the number of managing underwriters only for the smallest IPOs.
Keywords: IPO, analyst, quiet period, bubble
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