Political contributions and analyst behavior

Danling Jiang, Alok Kumar, Kelvin K F Law

Research output: Contribution to journalArticle

12 Citations (Scopus)

Abstract

We show that the personal traits of analysts, as revealed by their political donations, influence their forecasting behavior and stock prices. Analysts who contribute primarily to the Republican Party adopt a more conservative forecasting style. Their earnings forecast revisions are less likely to deviate from the forecasts of other analysts and are less likely to be bold. Their stock recommendations also contain more modest upgrades and downgrades. Overall, these analysts produce better quality research, which is recognized and rewarded by their employers, institutional investors, and the media. Stock market participants, however, do not fully recognize their superior ability as the market reaction following revisions by these analysts is weaker.

Original languageEnglish (US)
Pages (from-to)37-88
Number of pages52
JournalReview of Accounting Studies
Volume21
Issue number1
DOIs
StatePublished - Mar 1 2016

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Analysts
Political contributions
Stock prices
Upgrade
Stock market
Donation
Stock recommendations
Earnings forecasts
Employers
Research quality
Institutional investors
Forecast revisions
Market reaction

Keywords

  • Conservative analysts
  • Equity analysts
  • Forecasting style
  • Market reaction
  • Political contribution

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Accounting

Cite this

Political contributions and analyst behavior. / Jiang, Danling; Kumar, Alok; Law, Kelvin K F.

In: Review of Accounting Studies, Vol. 21, No. 1, 01.03.2016, p. 37-88.

Research output: Contribution to journalArticle

Jiang, Danling ; Kumar, Alok ; Law, Kelvin K F. / Political contributions and analyst behavior. In: Review of Accounting Studies. 2016 ; Vol. 21, No. 1. pp. 37-88.
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