The Field of Investment Advice: The Social Forces that Govern Equity Analysts

Crawford Spence, Yuval Millo, James Valentine*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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Abstract

Literature on equity analysts presents a conundrum: analysts are seen as influential market participants, yet researchers widely criticize them for their bias and inaccuracy. Studies drawing from economic frames struggle to explain this. Therefore, we develop a new conceptualization that positions analysts as actors operating in a social field. Drawing on a qualitative study involving 70 interviews with analysts and portfolio managers, we offer two broad insights. Firstly, we identify long-term interpersonal and inter-institutional ties between buy-side and sell-side actors which contribute to social inertia in the field. Secondly, we illustrate how sell-side analysts’ social environment is dichotomous, pushing some to converge with consensus estimates, while encouraging others to diverge. Taken as a whole, our findings contribute to the accounting literature by enriching our understanding of the social and institutional forces that govern analyst behavior.
Original languageEnglish
Number of pages49
JournalAccounting Review
Publication statusAccepted/In press - 12 May 2023

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