Affiliated mutual funds and analyst optimism
By: by Simona Mola and Massimo Guidolin.
Contributors: Guidolin, Massimo.; Federal Reserve Bank of St. Louis.
Series: Working paper -- 2007-017A; Working paper (Federal Reserve Bank of St. Louis : Online) -- 2007-017A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2007
Place of publication: [St. Louis, Mo.]
Language: eng
Format: Electronic resource
Description: "Prior studies have shown that investment banking affiliations place pressure on analysts to produce optimistic recommendations on the investment bank's stock-clients.  Our analysis of a large sample of recommendations issued from 1995 through 2003 indicates that a mutual fund affiliation also affects analysts' research.  That is, analysts are likely to look favorably at stocks held by the affiliated mutual funds.  Controlling for a variety of factors including the investment banking affiliation, we find that the greater the portfolio weight of a stock for the affiliated mutual funds, the more optimistic the analyst rating becomes when compared to the consensus.  Reputation partly restrains the optimism of analyst recommendations.  In fact, the presence of other institutional investors as shareholders of the recommended stocks curbs analyst optimism.  Nevertheless, from 1999 through 2001, star analysts report the most optimism when they recommend stocks in the portfolios of affiliated mutual funds"--Federal Reserve Bank of St. Louis web site.
Notes: Title from PDF file as viewed on 4/19/2007.

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.