The Speed of Information and the Sell-Side Research Industry

Bradley, Daniel; Clarke, John‐Paul; Zeng, Linghang

doi:10.1017/s0022109019000577

Cited by 7 publications

(4 citation statements)

References 43 publications

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“…Speed can be contentious, so FinTechs often combine that feature with other services. For example, www.theflyonthewall.com was sued by several investment banks for publishing analysts' reports when they came out (Bradley, Clarke, and Zeng (2020)). The FinTech survived a court-ordered injunction that prevented it from continuing to provide such information by offering other features.…”

Section: A Market Intelligence Fintechsmentioning

confidence: 99%

FinTechs and the Market for Financial Analysis

Grennan¹,

Michaely²

2020

J. Financ. Quant. Anal.

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Hundreds of equity market intelligence financial technology firms (FinTechs) have formed in the last decade. We assemble novel data to describe their capabilities, users, and consequences. Our data suggest that these FinTechs i) aggregate many data sources, including nontraditional ones (e.g., Twitter, blogs), and synthesize such data using artificial intelligence to make investment recommendations, and ii) change Internet users’ information discovery by serving as substitutes for traditional information providers. We evaluate some nontraditional data and find evidence suggesting that such data contain valuable information or “crowd wisdom” that links to informational efficiency. Overall, our findings are consistent with this innovation benefiting investors and markets.

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Section: A Market Intelligence Fintechsmentioning

confidence: 99%

FinTechs and the Market for Financial Analysis

Grennan¹,

Michaely²

2020

J. Financ. Quant. Anal.

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“…According to Gu and Kurov (2020), there are times when financial analysts tend to release recommendations before the market opens. This is corroborated by Bradley et al. (2020) who report that in the United States of America, “The Fly on the Wall”, a digital publisher of financial news leaks almost half of analyst recommendations changes before the stock market opens on the recommendation release date.…”

Section: Resultsmentioning

confidence: 68%

“…According to Gu and Kurov (2020), there are times when financial analysts tend to release recommendations before the market opens. This is corroborated by Bradley et al (2020) who report that in the United States of America, "The Fly on the Wall", a digital publisher of financial news leaks almost half of analyst recommendations changes before the stock market opens on the recommendation release date. It is therefore likely that recommendations announced on day t could affect online News t−1 =Twitter t−1 which measures firm i's online investor sentiment from market open on day t − 1 to market open on day t. To ameliorate complications from such reverse causality, online investor sentiment released on day t − 1 (News t−2 =Twitter t−2 in the regression models) is used.…”

Section: Descriptive Statisticsmentioning

confidence: 72%

Does online investor sentiment explain analyst recommendation changes? Evidence from an emerging market

Nyakurukwa

Seetharam

2022

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PurposeThe authors examine how financial analysts respond to online investor sentiment when updating recommendations for specific stocks in South Africa. The aim is to establish whether online sentiment contains significant information that can influence analyst recommendations. The authors follow up the above by examining when online investor sentiment is most associated with analyst recommendation changes.Design/methodology/approachFor online investor sentiment proxies, the authors make use of the social media sentiment and news media sentiment scores provided by Bloomberg Inc. The sample size includes all companies listed on the Johannesburg Stock Exchange All Share Index. The study uses traditional ordinary least squares to examine the relation at the mean and quantile regression to identify the scope of the relationship across the distribution of the dependent variable.FindingsThe authors find evidence that pre-event news sentiment significantly influences analyst recommendation changes while no significant relationship is found with the Twitter sentiment. Further analysis shows that news sentiment is more influential when the recommendation changes are moderate (in the middle of the conditional distribution of the recommendation changes).Originality/valueThe study is the one of the first to examine the association between online sentiment and analyst recommendation changes in an emerging market using high frequency data. The authors also make a direct comparison between social media sentiment and news media sentiment, some of the most used contemporary investor sentiment proxies.

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“…See https://citigatedewerogerson.com/wp-content/uploads/2018/09/CDR-IR-Survey-2018.pdf 12 Additional details on the FLY are provided inBradley, Clarke, and Zeng (2020) and in Section 2 ofBarclays Capital Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and …”

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confidence: 99%

Non‐Deal Roadshows, Informed Trading, and Analyst Conflicts of Interest

Bradley¹,

Jame²,

Williams³

2021

The Journal of Finance

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Non-deal roadshows (NDRs) are private meetings between management and institutional investors, typically organized by sell-side analysts. We find that around NDRs, local institutional investors trade heavily and profitably, while retail trading is significantly less informed. Analysts who sponsor NDRs issue significantly more optimistic recommendations and target prices, together with more "beatable" earnings forecasts, consistent with analysts issuing strategically biased forecasts to win NDR business. Our results suggest that NDRs result in a substantial information advantage for institutional investors and create significant conflicts of interests for the analysts who organize them.THE 2000 REGULATION FAIR DISCLOSURE ("Reg FD") and the 2003 Global Analyst Research Settlement ("Global Settlement") are two of the most significant regulatory actions designed to protect retail investors in the past few decades. Reg FD was introduced to level the information playing field for retail investors by prohibiting the disclosure of nonpublic, material information to selected parties, and the Global Settlement was designed to reduce the conflicts of interest that arise when financial institutions engage in both investment banking activities and equity research. Existing evidence suggests that these regulations have been at least somewhat successful in achieving their stated

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The Speed of Information and the Sell-Side Research Industry

Cited by 7 publications

References 43 publications

FinTechs and the Market for Financial Analysis

FinTechs and the Market for Financial Analysis

Does online investor sentiment explain analyst recommendation changes? Evidence from an emerging market

Non‐Deal Roadshows, Informed Trading, and Analyst Conflicts of Interest

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