Should financial gatekeepers be publicly traded?
We investigate how a broker firm’s initial public offering (IPO) affects its analysts’ fiduciary duty of providing independent and objective recommendations. We find that the analysts of newly listed broker firms issue more positively biased recommendations in the first 2 to 3 years after their empl...
| Κύριος συγγραφέας: | |
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| Άλλοι συγγραφείς: | ; |
| Τύπος μέσου: | Ηλεκτρονική πηγή Άρθρο |
| Γλώσσα: | Αγγλικά |
| Έλεγχος διαθεσιμότητας: | HBZ Gateway |
| Journals Online & Print: | Φόρτωση...
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| Interlibrary Loan: | Interlibrary Loan for the Fachinformationsdienste (Specialized Information Services in Germany) |
| Έκδοση: |
2020
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| Στο/Στη: |
Journal of business ethics
Έτος: 2020, Τόμος: 164, Τεύχος: 1, Σελίδες: 175-200 |
| Άλλες λέξεις-κλειδιά: | B
Initial public offering
B Broker firms B Aufsatz in Zeitschrift B Financial gatekeepers B Analyst recommendation B Ethical Conduct |
| Διαθέσιμο Online: |
Volltext (lizenzpflichtig) Volltext (lizenzpflichtig) |
| Σύνοψη: | We investigate how a broker firm’s initial public offering (IPO) affects its analysts’ fiduciary duty of providing independent and objective recommendations. We find that the analysts of newly listed broker firms issue more positively biased recommendations in the first 2 to 3 years after their employers’ IPO than before the IPO. The increase in the recommendation bias is greater among analysts of affiliated brokers and brokers that raise additional capital after their IPO than among other analysts. Newly listed broker firms experience significant increases in revenue and trading commission, and the increases are positively related to recommendation bias, after controlling for many other factors. More importantly, recommendation bias decreases as newly listed broker firms season and as the importance of trading commission declines. This suggests that public exposure through a broker firm’s IPO does not enhance the integrity and professional conduct of its financial analysts. Rather, economic incentives make financial analysts more accepting of unethical behavior. The overall results imply that the public trading of financial gatekeepers compromises the ethical relationship between financial service professionals and society in general. |
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| ISSN: | 1573-0697 |
| Περιλαμβάνει: | Enthalten in: Journal of business ethics
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| Persistent identifiers: | DOI: 10.1007/s10551-018-4044-6 |