Does Analyst Affiliation Matter? Analyzing Performance of Security Analyst Recommendations Subsequent fPO) Loan Syndication) and MBA Events.

Abstract

This thesis examines the differences in the value of analyst consensus recommendations subsequent to IPOs, syndicated loans, and M&A deals depending on their affiliation status. Relying on recommendations issued on U.S. firms between January 2002 and December 2020, we document statistically significant differences between affiliated and non-affiliated analysts subsequent to IPOs and M&A deals. However, subsequent to syndicated loans, we find no statistically significant differences between the analysts. Stocks with the least favorable recommendations from non-affiliated analysts generate a monthly abnormal gross return of -2.665 percent subsequent to IPOs. Contrarily, stocks with the least favorable recommendations from affiliated analysts generate a monthly abnormal gross return of -3.259 percent subsequent to M&A deals. The results suggest that affiliated analysts' subsequent M&A deals possess informational advantages, while subsequent IPOs they reveal a tendency to issue biased recommendations.