Financial Analysts and Collective Reputation: Theory and Evidence

Abstract

This paper studies the impact of collective reputation on the reporting strategy of experts that face con ‡icts of interest. The framework we propose applies to di¤erent settings involving decision makers that rely on experts for making informed decisions, in particular we consider sell-side …nancial analysts. We …nd that collective reputation has a non-monotonic e¤ect on the degree of information revelation. In general, truthful revelation is more likely to occur when there is more uncertainty on the average ability of analysts as a group. In particular, above a certain threshold, an increase in collective reputation always makes truthful revelation more di¢ cult to achieve. We test this theory by creating an index on the market's perception of the general reliability of analysts'recommendations. The empirical analysis provides evidence that collective reputation plays a role in determining the behaviour of analysts independently of their individual reputation.

Impacts of Consumers and Real Estate Enterprises on the Implementation of Prefabrication in Residential Buildings: The Moderating Role of Incentive Policies

“…If education and reputation work together, it will play a better guiding effect on people's behavioral intention. This education increases reputational pressures effectively [50]. As a result, the positive relationship between BIP and ABP might be strengthened by government reputational incentives.…”